Corruption and business growth and development: The setting - Thoughts from GNCCI - The Setting

Part 1: The setting 

Since independence in the late 1950s and early 1960s, many African countries, including Ghana, have been battling underdevelopment as manifested in illiteracy, poor health, low incomes, food insecurity, unsanitary and unhygienic living environments, and poverty and their undesirable effects, in a conflicting scenario of natural resource plenty and development funds’ scarcity. From the basic needs approach, to import substitution, to economic recovery and structural adjustment  and their related strategies, several development paradigms have been proffered as frameworks for tackling the problems at different times, but throughout all these trials the often cited constraint is inadequate funds. International development assistance has thus been an integral part of the efforts that are aimed at lifting African countries out of their underdevelopment quagmire. However, all the efforts and the fund resource flows seem only to dent the problem rather than make major inroads.

In the particular case of Ghana, the strategies have evolved from growth and poverty reduction to the current emphasis on private sector led development. The emphasis on the private sector is evident in the government’s “one district, one factory” policy which, as reported by citifmonline on June 24, 2017, has attracted US$2 billion from the Chinese government. The core feature of the policy is the establishment of one viable factory in each district in Ghana with dominant participation by the private sector, and with the purpose of transforming the country through industrialization, and creating employment opportunities for the citizenry.

While the catch phrase “one district, one factory” is nouvelle, and the emphasis on private sector dominance pertains, the essential ingredients and intents of the policy are similar to what some of the previous governments tried to do under import substitution strategies which led to the establishment of state-owned enterprises in the late 1950s and early 1960s, and the relatively recent presidential special initiatives. The fact that the previous attempts failed is not in doubt, and aside the numerous economic phenomena, including inefficiencies and mismanagement, that were cited as the explanatory variables for the failures of the earlier attempts, another crucial variable that is often cited for policy failures is corruption. 

While corruption has always served as an impediment to Ghana’s development efforts, the level has now become almost intractable. A World Bank (2013) enterprise survey showed that the graft index for Ghana approximated 30, far above sub-Saharan Africa’s level of 20 and 15 for lower middle-income countries.

This essentially means that graft in Ghana is twice that of comparable developing countries. In an opinion piece published in Myjoyonline.com it was asserted that we can concretely say that corruption in Ghana is not just a mere perception but inherently pervasive in the country as evidenced by Anas’ exposé in the Judiciary. It was opined that since the judiciary is a very important state organ that is expected to adjudicate, preserve and safeguard the laws that protect the citizens, acts of corruption by its functionaries, even if perceived, can compromise law enforcement.

When the judiciary is distrusted, then the penchant for mob violence and vigilante justice prevail, rendering a country lawless with the accompanying uncertainties that have dire consequences for business. In addition, reports frequently surface with respect to corruption in the legislature or parliament. When two important arms of government experience dented integrities, the consequences can be disastrous for overall governance and thus business activities.