Cocoa in Ghana: Shaping the Success of an Economy

No other country comes to mind more than Ghana when one speaks of cocoa. Likewise, one cannot think of Ghana without thinking of its cocoa sector, which offers livelihoods for over 700,000 farmers in the southern tropical belt of the country. Long one of Ghana’s main exports, cocoa has been central to the country’s debates on development, reforms, and poverty alleviation strategies since independence in 1957. The cocoa sector in Ghana has not been an unmitigated success, however. After emerging as one of the world’s leading producers of cocoa, Ghana experienced a major decline in production in the 1960s and 1970s, and the sector nearly collapsed in the early 1980s. Production steadily recovered in the mid-1980s after the introduction of economywide reforms, and the 1990s marked the beginning of a revival, with production nearly doubling between 2001 and 2003. These ups and downs offer interesting lessons. Various administrations in Ghana, including the colonial one, have used cocoa as a source of public revenue, and in so doing the Ghanaian experience offers a recurrent example of a policy practice followed by many other African countries: taxing the country’s major export sector to finance public expenditure (Herbst 1993). Revenue extraction by the state has had varying effects on production depending on global prices, marketing costs, explicit taxes on the sector, and macroeconomic conditions such as inflation and overvaluation of exchange rates and inelasticity of cocoa supplies. Regardless of the level of extraction, the need for sound macroeconomic management, of inflation and exchange rates in particular, becomes evident for continuing to offer incentives for production. The other is the need for Ghana’s cocoa pricing policy to arrive at a marketing arrangement that does not kill the goose that lays the golden eggs. Ghana appears to have achieved such as arrangement without fully liberalizing the sector as other producers in West Africa have

The case of tomato in Ghana: processing

Processing of highly perishable non-storable crops, such as tomato, is typically promoted for two reasons: as a way of absorbing excess supply, particularly during gluts that result from predominantly rainfed cultivation; and to enhance the value chain through a value-added process. For Ghana, improving domestic tomato processing would also reduce the country’s dependence on imported tomato paste and so improve foreign exchange reserves, as well as provide employment opportunities and development opportunities in what are poor rural areas of the country. Many reports simply repeat the mantra that processing offers a way of buying up the glut. Yet the reality is that the “tomato gluts,” an annual feature of the local press, occur only for a few weeks of the year, and are almost always a result of large volumes of rainfed local varieties unsuitable for processing entering the fresh market at the same time, not the improved varieties that could be used by the processors. For most of the year, the price of tomatoes suitable for processing is above the breakeven price for tomato processors, given the competition from imports. Improved varieties (such as Pectomech) that are suitable for processing are also preferred by consumers and achieve a premium price over the local varieties

Mainstreaming the Participatory Approach in Water Resource Governance: The 2002 water law in Kenya

O.A. K'Akumu examines reforms that have been put in place by the Water Act of 2002 in Kenya. He shows that the government remains an active and powerful player in the management of water while local institutions need to be strengthened for effective water resource governance. Development (2008) 51, 56–62. doi:10.1057/palgrave.development.1100457

Economic transformation in Ghana: where will the path lead?

In the context of the Ghanaian government’s objective of structural transformation with an emphasis on manufacturing, this paper provides a case study of economic transformation in Ghana, exploring patterns of growth, sectoral transformation, and agglomeration. We document and examine why, despite impressive growth and poverty reduction figures, Ghana’s economy has exhibited less transformation than might be expected for a country that has recently achieved middle-income status. Ghana’s reduced share of agriculture in the economy, unlike many successfully transformed countries in Asia and Latin America, has been filled by services, while manufacturing has stagnated and even declined. Likely causes include weak transformation of the agricultural sector and therefore little development of agroprocessing, the emergence of consumption cities and consumption-driven growth, upward pressure on the exchange rate, weak production linkages, and a poor environment for private-sector-led manufacturing