Perhaps the most significant part of Ghana’s President John Kufuor’s government reshuffle in February was the swapping of posts between the minister of finance and economic planning and the minister of education and sport. What can only appear as a demotion for Yaw Osafo-Maafo, from finance to education, was a promotion for Kwadwo Baah Wiredu. Early speculation hints that Mr Wiredu is being groomed for presidential office.
This might be no more than conjecture at the start of Mr Kufuor’s second term but the promotion is significant, not least because Mr Osafo-Maafo had a very respectable track record. He was also an experienced hand at dealing with the multilateral agencies and donors on whom Ghana is so dependent.
The fate of Ghana is a crucial litmus test of all the development strategies applied to Africa. The country, which is endowed with rich natural resources, was the first in sub-Saharan Africa to gain independence in 1957, endured 25 years of mismanagement, then went on to follow and apply diligently the best advice of the IMF and World Bank, more so than any other African country. It was rewarded with substantial debt relief, over and above generous aid and preferential trade arrangements.
Over time Ghana has built up strong institutions, and was the first to submit to the African Peer Review Mechanism, a system of vetting political and economic governance by fellow African countries. Its elections, in December, were deemed one of the freest and fairest in Africa. Yet despite growing its economy faster than the rest of Africa, Ghana is still well short of meeting the Millennium Development Goals. For a country where 45% of the population live on less than $1 per day, Ghana remains overly dependent on commodities (and the vagaries of commodity prices). Low income ultimately means little left over for investment, meaning Ghana is struggling to escape the poverty trap.
One of Mr Baah Wiredu’s first acts was to present a budget indicating his commitment to fiscal prudence. He also backed moves to remove subsidies on fuel prices, a necessary but painful policy. An accountant by training, Mr Baah Wiredu faces significant challenges to implement so-called “second generation” reforms. Now the economy has stabilised, he must create fast but sustainable growth. On a continent where few countries have managed that, the new finance minister will have his work cut out.
