A First Taste of Life After Neocolonialism

Many Ghanaians may not be aware, but their country is actually going through a second “decolonisation” phase right now.

The “neo-colonialism” that the country’s first President, Kwame Nkrumah, railed against so presciently is actually in fast retreat. At least as far as policy decision-making in Ghana is concerned. A few more sentences and my point would be clearer.

In 1998, the Ghanaian State collected about $1.2 billion in taxes. Foreign governments through their aid agencies – such as DFID, GTZ, USAID, DANIDA, JICA etc. – handed over to the government about $240 million in grants. Of the total planned expenditure of $2.13 billion, $600 million was financed by aid agencies through grants and concessional (low interest) loans.

Fast forward 20 years to today,  the phrase “concessional borrowing” has almost vanished from the country’s policy dictionary. Apart from a $191 million receipt from the IMF this quarter, low-interest loans from aid agencies have stopped being a thing in Ghana. Total grants from aid agencies and foreign governments shall amount to no more than $128 million this year. The Ghanaian authorities shall, on the other hand, be collecting taxes of nearly $8 billion.

In less than one generation, the West African nation has moved from European, Japanese and American governments financing more than 30% (40 to 50% in the early 90s) of its budget through handouts and low-interest loans to them financing just 3% (with the handout parts making up just 0.2% of GDP today compared with 8% in 1998, a 40x drop).

Whilst it is true that some of Africa’s good economic performers, such as Rwanda, where grants and low-interest loans still account for more than 30% of the national budget, are not yet in this state, the trend towards low aid dependence is actually strong across all of Africa’s reasonably well-performing economies. For instance, Zambia also, like Ghana, managed to drop the ratio of grants to GDP to 0.2% in 2016 before it saw an uptick to 0.7%.  Nigeria has for a long time had net aid levels of less than 1% of GDP.

What is the chief consequence of this development? Firstly, whereas a DFID Chief could get a same day appointment with the President of Ghana in 2000, today he/she would struggle to get a same day appointment with a Deputy Minister.

Aid agencies have stopped telling Africa’s major growing economies how to design their major systems of governance. For instance, when Ghana started large-scale public sector management reforms in 1994, and embarked on projects such as MTEF, PURFMAP, IPPD etc., virtually every detail had to be signed off in London, Washington and Amsterdam or Copenhagen.

Two decades later, when the country’s massive youth employment program – GYEEDA – was in full swing, officials hardheartedly approached the World Bank for support. The “consultant” they brought on board went online, copied some templates, and dumped it at GYEEDA, collected his money and walked away into the sunset. Truth is, Ghana had hundreds of millions of dollars of taxes in its kitty and didn’t really care for the World Bank’s “plenty grammar”.

There is no doubt that the incidents of grand corruption have increased in frequency and scale since Ghana started this second liberation from colonisation (or neocolonisation), marked by the symbolic “expulsion” of the IMF in 2006 (their current role in Ghanaian affairs is very different from before).

Of course, no way would a Western Aid Agency have allowed the amounts of money paid out to the likes of Woyome (a self-proclaimed “financial engineer” who was paid $32 million by the Ghanaian State for raising a phantom billion euro facility from Austria to build sports facilities in 2008) and the GYEEDA contractors (on whom the Ghanaian State lavished nearly a billion dollars, according to official reports, for all manner of harebrained schemes to “create” jobs for young people)  had money from these hand-wringing agencies been involved in a significant way.

As Professor Prempeh, a longtime observer of African policymaking, ponders over the prospect of kicking out Western policy imperialists only to replace them with “vulture capitalists” and “loan sharks” (Ghana’s high-interest loan borrowing in the commercial markets has jacked up, taking foreign debt as a share of GDP from 11% in 2002 to 55% today). Kobina Aidoo, another longtime observer of policy trends in Africa, marvels at the continued reliance on Aid for critical welfare services, even as newly tax-rich African countries happily splash on prestige projects. For example, Zambia relies on external funding for 60% of its health budget. Yet, the country is building another international airport at nearly $400 million.

All this generates complex feelings. It is impressive that Ghana, Zambia, Kenya and others have thrown off the shackles of the West’s policy colonisation. As it was when they threw off the shackles of political colonisation in the 1960s. Both achievements provide these African countries with moments of great pride and self-confidence. But it seems that Nkrumah was, once again, prescient when he said that the right to be independent also includes the right for a people to make their own mistakes and learn from them.

The only question is whether the corresponding responsibility for the consequences of an African country not learning from its mistakes are currently equitably shared between its elites, who have replaced the colonial policy overlords, and the masses, who under both the colonial and post-colonial systems are the worst sufferers of poor policy and corruption.

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