ACCRA, Ghana _
There are few public conveniences in Abofu, an impoverished neighborhood
in this West African capital. So when the government recently built a
20-seat restroom on a squalid lot filled with trash, most residents
welcomed the project.
"A few people have toilets in their
houses, but most of us have to walk a quarter-mile to the nearest
restrooms," said Victoria Agbo, who operates a four-seat tavern in a
wooden shed near the new washroom.
The washroom is one small element of a
grand poverty-relief project. Across this former British colony, the
Ghanaian government is busy building schools, roads and other public
projects - all financed with savings from debt relief. Last year, Ghana
completed a reform process in which industrial nations agreed to cancel
about $2 billion in debt, provided that Ghana invested its savings into
Now Ghana expects a new windfall. As the
world's big industrial powers meet next month at the Group of Eight summit
in Gleneagles, Scotland, Africa's intractable poverty will be at the top
of the agenda. The G-8 nations have agreed to forgive about $40 billion in
debt from international lenders such as the World Bank. Ghana, among the
18 countries in line for relief, would get most of its remaining debt
Organizers of the Live 8 concerts next
Saturday in Philadelphia and Europe are attempting to build public
pressure on the G-8 leaders to boost aid to Africa. While the U.S.
government has signed on to the debt-forgiveness plan, it has resisted
signing on to an ambitious British proposal to double about $50 billion in
annual aid that rich nations give to poor countries.
Still, debt relief alone would make a
"If there is cancellation, there
will be an immediate cash benefit to this economy of $100 million a
year," said Mahamudu Bawumia, special assistant to the governor of
the Bank of Ghana. "That is quite huge. You're making these savings
yearly. There is going to be more poverty relief."
Ghana is frequently cited as a model
nation that has implemented democratic reforms and worked hard to get its
fiscal house in order.
"In some parts of the West, there
is still an amount of skepticism about aid to Africa," said Gordon
Wetherell, the British ambassador to Ghana. "But things have really
changed, and Ghana demonstrates it is possible in Africa."
But the depth of Africa's problems, the
slow pace of reforms, and the limitations of debt relief are apparent in
Ghana's seaside capital, where about 1.7 million of Ghana's 21 million
They're especially visible in Abofu,
where the public restroom was finished six months ago. But it is still
unusable because the contractor neglected to connect the water supply.
"We're waiting for the plumbing to
be completed," said Frazier Essuman, who worked as a painter on the
project and now lives in the restroom as its watchman. He is using the
stalls to hang his laundry.
Just a few feet from the restroom,
Comfort Embra lives in a 10-by-10 wooden shack that is furnished with
three pieces of frayed furniture. She is the mother of six children. Her
husband is unemployed. She supports her family by selling plastic sachets
of pure drinking water at 3 cents a bag.
"A toilet is fine, but you see the
place where I live," said Embra, as a radio from the adjoining shack
blared through their shared plywood wall. "What I need is a house and
Ghanaian officials say that since
President John Kufuor was elected in 2000 - a rare African example where
an opposition party took power peacefully - Ghana has quickly instituted
management reforms to liberalize the economy. They say it is only a
question of time before growth speeds up.
"The economy was really in bad
shape when government came in," said Anthony Akoto, deputy minister
of finance and economic planning.
Parliament has approved new laws to
govern public procurement and audits. A profligate borrower on domestic
markets, government can now borrow no more than 10 percent of its revenue.
And, in a move that has sparked some public outcry, Kufuor has ended
subsidies for gasoline, which cost $200 million a year, or more than 5
percent of its budget.
By far Kufuor's biggest challenge was to
address the external debt, which stood at $6 billion in 2000.
Some of the debt carried over from
Ghana's early decades after independence in 1957, when the country went
through experiments with socialist and military governments, most of them
characterized by fiscal mismanagement that eventually led to political
crises and coups.
But Ghana, like most African countries,
accumulated the bulk of its debt in the last two decades. In Ghana, Lt.
Jerry Rawlings took over in 1981 after a coup and began a so-called
structural adjustment program monitored by international lenders. He
privatized the country's gold mines and allowed its currency to float on
the open market.
It was also under Rawlings that Ghana
made its transition from a military regime to a constitutional democracy;
Rawlings twice won multiparty elections in the 1990s before his party lost
power in 2000.
Though the debt had a stranglehold on
Ghana's economy, Rawlings declined to apply for relief from international
lenders under the Highly Indebted Poor Countries initiative. The HIPC
process requires indebted countries to implement market-based reforms
while channeling their savings from debt relief into programs that benefit
the poor - schools, clinics, rural roads and water projects. Some big
debtors like Nigeria, Kenya and Indonesia have refused to accept the
But Kufuor, an avowed free-market
enthusiast, agreed to the debt-relief bargain - making Ghana one of 36
countries to have accepted the HIPC terms.
Political opponents in Ghana decried the
"humiliation" of being classified as a poor country and having
to suffer the intrusion of international lenders. The government has tried
to draw public attention to the benefits Ghana is receiving from debt
relief. High-profile infrastructure projects, such as the bathroom in
Abofu, carry large signs labeling them a "HIPC Benefit."
"We're building a lot of schools,
health clinics and roads," said Akoto, of the finance ministry.
"It's easier to see those, so that people can understand."
Some local observers are wary about how
the government is spending its debt-relief dividend, saying that most of
the money is being spent on construction whose maintenance is too easy to
neglect. In other countries, like Tanzania, critics complained that the
debt relief allowed governments to revert to old form and spend the money
on extravagances, such as a private jet for the president.
"I'm just afraid what the
government will do with the money," said Baba Tuahiru, Ghana's
national advocacy officer for the aid agency Oxfam. "Will it be spent
Meanwhile, the term "HIPC"
(HIP-ick) has entered the Ghanaian vocabulary as an expression for
anything of poor quality. Advertisers even proclaim their products are
better than a "HIPC standard."
Despite the political risks - Kufuor's
government was reelected last year with a bare majority - the new policies
have effectively brought inflation, interest rates and exchange rates
Ghana's reforms have generally received
good reviews, though international monitors are concerned Kufuor's
government is beginning to lose momentum when it should be picking up the
"The way public monies are being
used is improving," Mats Karlsson of the World Bank said about the
country's direction. "There is some misuse of money. But the biggest
problem so far is that the money is not being used strategically or
But the economy, while growing at a
robust rate of more than 5 percent, is still not generating sustained
growth rates exceeding the 7 percent per year that economists say Ghana
will need to ascend to "middle-income" status in 10 years. Per
capita earnings are still below $400 a year. Job growth is mediocre.
The U.S. government has encouraged
Kufuor to speed up the transformation to take advantage of the debt relief
and the country's flush economic times - prices of Ghana's two biggest
exports, cocoa and gold, are relatively high right now.
The World Bank's Karlsson dismissed
calls for debt relief to be extended to all countries rather than those
that have elected to accept the HIPC process.
"When some people say, 'Just forget
the debts,' I say, 'Look at the exact consequences of what you're saying,
because money is in limited supply, and if you're asking me, I want to put
the money in countries that are using it well,' " he said.