AFRICANGLOBE – Bono’s much-tweeted TED talk spotlighted Ghana, a West African country usually regarded as one of the continent’s better managed and more successful ‘lions’. Ghana’s journey towards ending extreme poverty – and zeroing out aid -has much to teach all African citizens and their development friends overseas, especially as the world contemplates the successors to the Millennium Development Goals after 2015.
How will Ghana ensure growth does indeed reach all citizens and inequalities don’t get entrenched? How can the development mistakes of the past be avoided going forward to accelerate progress and stop backsliding?
In 2007 the country took a turn for what statisticians call ‘low middle-income status’, meaning that average annual income started to quietly creep over $1,200 per capita. As the economy grows, tax revenues rise and extreme poverty declines, the government has more maneuvering room to prioritise the country’s long-term development needs and raise the resources to do so.
It is of course not all rosy in Ghana, as recent budget woes show, but the tone of the debate there seems more reminiscent of similar budget crises in America than of the usual scramble over absolute basics in the developing world.
But what do we mean when we say ‘extreme poverty’ is steadily becoming a memory rather than a reality in Ghana? The UN describes people as ‘extremely poor’ if they survive on less than a dollar and 25 cents a day. In Ghana, the number of people who qualify for this dubious badge has gone down from more than 50% to less than 27% in 20 years and on that trajectory should plummet to zero by 2025.
Extreme poverty data are often unreliable, but this positive trend is corroborated by other data on reductions in hunger, trends in family sizes, child mortality and so on. This trend is real. Ghana can take the extreme poverty rate to zero in ten years. The Zero Zone.
Zero – that is a number to remember. And rejoice over.
But it’s too soon to celebrate too much. Ghana, like most African countries, still has to grapple with entrenched inequality and extreme poverty in some parts. Take northern Ghana and the savannah region for instance. There, nearly 60% of the people fall within the unfortunate poverty bracket.
What is interesting is that Ghana now is in a position to develop an ‘internal Aid’ program. The government has set aside funds to finance special interventions in that part of the country. The Savannah Accelerated Development Authority, which was recently dogged with controversy over its investment choices, covers the northern region and could surely do with improved political oversight, but at least it’s a start. The program is uncannily similar to Aid from a rich country to a poor one, even using some of the same methodologies, but the Ghanaians are the ones in charge.
So how is Ghana making its money? Over the last decade and half GDP has grown nine-fold. The domestic tax base has expanded dramatically in absolute terms. This point is a bit complex, since as a share of GDP, the total take in taxes has actually declined from a high of 22% of GDP a decade ago to around 12% today. However, one needs to take into consideration how much GDP has grown over the period to realize how significant the current tax revenue amount of about $6.5 billion is in the historical scheme of things: it represents a fourfold increase in tax revenue over the decade.
Clearly, much depends on how effectively the government accounts for the use of these financial resources. All too often the focus is on corruption-prevention, and justifiably so. But it is becoming clear that ‘performance-accountability’ is just as important. Officials who turn out to be square pegs in round holes may not steal the funds, but they can waste it on poorly thought-through or executed schemes and the results would be no different.