Ghana: Background and U.S. Relations

^Pr^ep^ar^{ed f}^o^r^M^e^m^b^ers^an^d^Com^mⁱ^t^t^ees^of^C^ong^r^e^ss

This report, which will be updated as events warrant, provides background information on current
developments in Ghana and U.S. bilateral relations with Ghana.

Introduc tion ..................................................................................................................................... 1
Political Scene.................................................................................................................................1
2008 Election...................................................................................................................................2
Kufuor Record.................................................................................................................................4
Economy .......................................................................................................................................... 4
Prospects .......................................................................................................................................... 5
International Relations....................................................................................................................5
U.S. Relations..................................................................................................................................6
Author Contact Information............................................................................................................7

Ghana held national elections in December 2008, which resulted in a narrow run-off presidential
victory for John Atta Mills of the opposition National Democratic Congress (NDC) party, which
also gained a parliamentary majority. The election of Atta Mills, who had run unsuccessfully run
for the presidency in Ghana’s two previous national elections, marked Ghana’s fifth consecutive
democratic election and preceded its second democratic transfer of power from one political party
to another. This watershed, a rare occurrence in post-independence sub-Saharan Africa, signified
Ghana’s further maturation as a democracy following a transition from “no-party” rule that began
in 1992.
U.S.-Ghanaian relations are warm. In mid-February 2008 President Bush traveled to Ghana,
which in 2006 signed a $547 million Millennium Challenge Corporation (MCC) Compact. His
goal was to personally review MCC and other U.S. aid programs in Africa. He held talks with
President John Agyekum Kufuor and other African leaders on prospective continued U.S.-African
partnership to sustain “democratic reform, respect for human rights, free trade, open investment
regimes, and economic opportunity” across Africa. His visit to Ghana focused on improved health
prospects for Ghana resulting from its designation in 2008 as a President’s Malaria Initiative
focus country; prospective education improvements resulting from Ghana’s participation in the
President’s Expanded Education Initiative; and trade growth efforts under the U.S. African Global
Competitiveness Initiative (AGCI). The AGCI West Africa Trade Hub, which promotes intra-
African and U.S.-African trade, is based in Ghana, which also hosts the U.S. Agency for
International Development (USAID) regional development program. Apart from development
cooperation, Ghana is widely seen as a key U.S. partner in the region and as an African “success
story.” It has undergone a successful transition to democracy and has enjoyed substantial
economic gains in recent years. It is a stable country in an often volatile sub-region, and has
helped to mediate several political and/or military conflicts in West Africa countries over the last
quarter century. It is also praised for its near-constant contribution of troops to international
peacekeeping operations in Africa and elsewhere.

President Kufuor will step down as president upon the inauguration of President-Elect Atta Mills
on January 7, 2009, after having served his second term in office. Kufuor was ineligible to run for
the presidency in 2008 due to constitutional term limits. Kufuor, age 70, is a former veteran
opposition figure and Oxford-trained lawyer, businessman, and former deputy foreign minister
and parliamentarian. He first won the presidency in 2000, having bested Atta Mills in a poll that
led to Ghana’s widely praised, first-ever democratic presidential and political party succession. In
2004, he again triumphed over Atta Mills, winning 52% of votes in a poll that was generally
calm, peaceful, and transparent, though marred by limited violence (CIA 2008 World Factbook).
In simultaneous parliamentary elections, Kufuor’s New Patriotic Party (NPP) increased its
legislative margin by 26%, winning 128 seats, while the NDC won 94. Two smaller parties and an
independent won all other seats (Interparliamentary Union data). Kufuor used the slogan “So far,
so good” to claim a solid record of economic stability, market-based reforms and growth, and
broad quality of life improvements after a period of economic stagnation under the NDC.

Kufuor’s reelection in 2004 marked Ghana’s fourth consecutive democratic election. Ghana
appeared to have durably consolidated a transition to democratic rule that began in 1992, when
the then-military leader, Jerry Rawlings, retired from the military to run as a civilian presidential
candidate in multiparty elections. Rawlings had first come to power in a 1979 military coup, after
which elections were held. He led a second military coup in 1981, establishing a populist, reform-
oriented ruling civil-military entity, the Provisional National Defense Council (PNDC). The
PNDC coup followed 15 years of coups d’etat and a string of military-dominated, often corrupt
governments that ruled after the military ousted Kwame Nkrumah, Ghana’s first elected Prime
Minister, in 1966. He was toppled shortly after he transformed Ghana into a one-party state.
Nkrumah, famous advocate of African unity and socialism, led Ghana to independence from ^th
Britain in 1957. Ghana celebrated its 50 year of independence in 2007.

Ghana held presidential and parliamentary elections on December 7, 2008, resulting in a marginal
electoral win for the NDC. The election campaign was contested vigorously but was reportedly
largely peaceful. Focal electoral issues included public dissatisfaction over electricity and water ¹
shortages, rising food, fuel, and utility prices, and reports of corruption. Recent economic
expansion and prospective oil revenue-fueled growth, however, were seen as benefitting the NPP,
as were divisions in the NDC, from which a dissenting faction broke away to form a new splinter
party. While Atta Mills was selected as the NDC presidential candidate, notwithstanding his two
earlier losses as NDC flag bearer, 18 NPP candidates fiercely vied for the NPP nomination in the
run-up to the NPP party congress in late 2007. Akufo-Addo won the nomination in the first round
of voting, surprising some observers, given that President Kufuor had reportedly favored another
candidate. The NPP nomination process drew some criticism because the $25,000 party
nomination fee, in a country with an average income of about $520, was seen as barring ²
contenders who lacked wealth or could not raise large amounts of cash to rally support. Ghana
generally enjoys inter-ethnic harmony, but regional rivalries and disparities that are sometimes ³
viewed in ethnic terms play a role in politics. Ethnicity, however, does not appear to have played
an overt or key role in the election.
With some minor, mostly technical exceptions, voting on December 7 was free, open, transparent,
according to reports by national and international observers who monitored the vote, along with a ⁴
large number of national political party observers. The election elicited widespread praise

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internationally, despite some minor shortcomings.⁵ These reportedly included temporary
shortages of voting materials at some polling places, along with limited, minor allegations of ⁶
irregularities, mainly in two constituencies, Asutifi South and Akwatia. In the initial presidential
vote, John Atta Mills of the opposition National Democratic Congress (NDC) party won a

47.92% vote share. His main rival, former Foreign Affairs Minister Nana Addo Dankwa Akufo-

Addo of the New Patriotic Party (NPP)—President Kufuor’s party and the majority party after the
previous election in 2004—won a 49.13% vote share. Given that neither leading candidate
attained a 50% vote share, a requirement for electoral victory, a run-off vote was later held. In the
December 7 parliamentary vote, the opposition NDC achieved a narrow majority, winning 114
(50%) of 228 seats for which results had been determined as of January 6, 2009—of a total of 230
seats—against 107 (nearly 47%) seats for the NPP. Seven additional seats were won by two minor
parties and independent candidates. The winners of two seats had not been certified as of January

6, 2009.

A presidential run-off vote between Atta Mills and Akufo-Addo was held in 229 constituencies on
December 28, resulting in a 50.13% vote share for Atta Mills, with Akufo-Addo winning 49.87 ⁷
percent of the vote, 23,050 votes fewer than Atta Mills. These results failed to decide the
election, however, because incorrect allocations of voting materials were delivered to one
constituency, Tain District, in the central Brong Ahafo Region, potentially disenfranchising ⁸
voters. This discrepancy prompted the Electoral Commission to order a repeat of runoff balloting
in Tain, an outcome that conferred on Tain’s estimated 53,000 voters the potential power to ⁹
decide the outcome of the race. Although the NPP attempted a legal delay and later a political
boycott of the Tain vote, which was controversial and spurred some very minor, isolated post-¹⁰
election violence, it later accepted the outcome. After Tain was added to the national run-off
totals, Atta Mills garnered a winning 50.23% share of votes cast against a 49.77% vote share for ¹¹
Akufo-Addo.

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Kufuor’s first-term agenda emphasized efforts to bolster national unity and social equity after the
2000 election; to fight reportedly widespread corruption; to reassert the rule of law; and to revive
a flagging economy. Upon taking office, he faced diverse poor economic indicators: flat growth;
currency deflation; poor or declining prices for key commodity exports (gold and cocoa); high
inflation, interest, and unemployment; and dependence on foreign aid. Kufuor vowed to tackle
these problems aggressively, but faced a roughly evenly party-divided legislature and a NDC-
dominated bureaucracy. He met these challenges by taking steps to privatize state firms, diversify
the economy, increase Ghana’s world market access, and pursue politically difficult fiscal
austerity policies. Ghana continues to face multiple economic challenges, but the Kufuor
administration has achieved many of its initial goals, including substantial utility deregulation, an
increase in hard currency reserves, and high economic growth rates.

Ghana’s export earnings have grown in recent years; they stood at about $3.7 billion in 2006 and
are estimated at $4.1 billion in 2007 (Economist Intelligence Unit [EIU] data). In June 2007, the
discovery of offshore light crude oil reserves conservatively estimated in the 450-550 million
barrel range, has boosted future export earning prospects. The economy has grown at an annual
rate of 5.5% to 6.2% in recent years, and is forecast to rise slightly in the next two years. Current
inflation, around 10%, is low by historical standards (EIU data). Domestic savings rates are
rising, and a large influx of expatriate remittances has boosted growth, notably in construction.
The small Ghana Stock Exchange has boomed in recent years, and in 2003 Ghana received its
first sovereign credit rating, which has since been upgraded. In September 2007, it successfully
and for the first time raised $750 million in international Eurobond issues. Ghana largely
successfully fulfilled its World Bank and International Monetary Fund (IMF)-backed Ghana
Poverty Reduction Strategy (GPRS). In part due to this, Ghana has received debt relief under the
Heavily Indebted Poor Countries Initiative and the Multilateral Debt Relief Initiative. This is
leading to additional international financial institution assistance, and has resulted in a series of
actual or planned debt write-offs by bilateral creditors totaling about $3.5 billion. The World
Bank’s 2006/07 Doing Business report ranked Ghana third among 10 global “Top Reformers”
based on gains in public service provision, contract mediation, import operations, and reductions
in red tape for property and business start-ups.
Social indicators have steadily improved. Ghana reportedly may become the first African country
to surpass the United Nations Millennium Development Goal of halving poverty by 2015. Rising
commodity prices, notably of key exports like cocoa and gold, as well as growth in tourism, have
played a major role in economic growth. The Kufuor administration also attributes Ghana’s recent
economic successes to fiscal discipline, improved revenue collection, and to the government’s
policy agenda. It emphasizes liberal, private sector-focused economic reform goals and efforts to
promote good governance and improve living standards. The Kufuor government has reportedly
boosted investment in education, healthcare delivery, communications, and infrastructure. The
latter is fairly developed by regional standards but in many cases is aging or inadequate to meet
future demands. The government is also seeking to address possible socio-economic and
regulatory challenges arising from a forecast rise in oil earnings. A state task force is studying
ways to ensure that such funds are used for socially equitable economic diversification projects
and to develop the nascent oil sector. The government also plans to create a national stabilization

fund to minimize economic growth shocks and revenue volatility associated with its dependence
on cocoa, gold, timber and oil exports.

Despite much economic success, poverty remains widespread, notably among the rural majority.
From 1997-2003, 40% of Ghanaians lived below the poverty line. Joblessness also remains high.
Poverty rates are slowly declining, however, and the average annual income of $510 has grown
markedly from the 2003 level of $300. The economy remains highly rural and agricultural, even
though about 47% of the population is urban, which is high by regional standards. Agriculture
employs about 60% of workers, and contributes about 37% of annual gross domestic product
(GDP). Services, notably the information technology and financial sectors, have expanded rapidly
and are eclipsing agriculture; they contribute an estimated 37-40% of GDP. Ghana has established
a small offshore call and information processing industry, and several new banks have been
created. Industry, notably the gold mining sector, has also grown substantially; it provides nearly
25% of annual GDP. The government supports the extensive small-scale and informal sectors
through the use of micro-loans and small business-friendly policies. A key challenge is an
insufficient electricity supply. The government is pursuing several national and international
regional power generation or distribution projects and efforts to liberalize the electricity sector.
One regional effort, the U.S.-backed West African Gas Pipeline, which is slated to bring natural
gas from Nigeria to Ghana and it eastern neighbors, had faced repeated delays, but came online in ¹²
mid-December 2007. Other key economic challenges include low wages and productivity rates,
and high oil and food prices. Floods in 2007 also devastated northern towns and farms.
Transparency and accountability are key goals of the Kufuor administration. It backed passage of
several anti-corruption and public sector transparency laws, made Ghana a participant in the
Extractive Industries Transparency Initiative (EITI, an international revenue transparency effort),
and signed and ratified the African Union convention on corruption, among other actions.
Corruption, nevertheless, remains a problem. Public sector bribery is reportedly common, and
there have been several high profile corruption cases involving top officials. Some critics contend
that anti-corruption law enforcement is often weak. Notwithstanding the Kufuor government’s
private sector orientation and diverse achievements, the State Department’s FY2008
Congressional Budget Justification, mirroring the views of some other observers, stated that
Ghana “remains a difficult place to do business; contract sanctity, clear land title, and expeditious
licensing regimes present daunting challenges. Schools are inadequate, and quality health care is
unavailable for many, particularly, for the poor and the disenfranchised.”

Ghana’s government has actively mediated in crises in Liberia, Cote d’Ivoire, and Togo. Some
observers believe that its close relations with the late Gnassingbe Eyadema, former president of
Togo, may have caused it to take a moderate stance vis-à-vis Togo’s 2005 leadership succession
and electoral crisis, which led about 12,000 Togolese to enter Ghana as refugees. Some human

¹²^W^e^s^t^A^f^rⁱ^c^aⁿ^G^a^s^Pⁱ^pe^li^ne^C^o^m^p^aⁿ^y⁽^W^A^P^C^o⁾^,^“^F^ir^s^t^G^a^s^R^e^ac^he^s^G^h^aⁿ^a^,^”^D^e^cem^be^r^11,²⁰^{08; K}^w^a^sⁱ^K^pod^o,
^“^G^ha^na^pipe^line^g^e^ts^fⁱ^r^s^{t N}ⁱ^g^e^rⁱ^{an g}^a^s^,^”^R^e^ute^r^s^vⁱ^a^T^hom^s^{on Fi}^na^nc^ia^{l N}^e^w^s^/For^be^s^,^D^e^c^e^m^b^e^r^{13, 20}^08;^aⁿ^d^B^a^nk
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rights advocates also criticized Ghana’s decision to facilitate the return of Charles Taylor, former
president of Liberia, to his country from peace talks in 2003 in Ghana after he was indicted for ¹³
war crimes by the U.S.-backed Special Court for Sierra Leone. Ghana contributes a
considerable number of troops to international peacekeeping operations, notably within Africa. It
is seen as having an increasingly professional military, following decades of military intervention
in state politics. Ghana is also active in helping to develop African peacekeeping capacities; it
hosts a regional peacekeeping training center. The United States has provided training and ^th
equipment to the center. Ghana was elected to chair the African Union in 2007 and hosted the 9
African Union Summit in July 2007. It also served as a U.N. Security Council member, 2006-
2007. Like many African countries, Ghana is pursuing greater economic cooperation and trade
ties with China, and has increased its exports to China, notably manganese and cocoa.

U.S.-Ghanaian relations are close, and a small population of Americans, many of African-
American descent, has settled permanently in Ghana. The Bush Administration has viewed Ghana
as “a key African partner” due to its role in promoting international security; its development of a
“vibrant and stable” democracy; and its role as a key African market-oriented U.S. trading partner
(FY2008 Congressional Budget Request). Ghana is a leading African buyer of U.S. goods, but
bilateral trade, while growing, is relatively small. In 2007, U.S. exports to Ghana totaled $416
million, up from a $313 million average in 2005 and 2006. U.S. imports from Ghana stood at
$199 million in 2007 and averaged $175 million in 2005 and 2006. They have grown steadily,
from $115 million in 2002. Ghana is eligible for all trade benefits under the U.S. African Growth ^th
and Opportunity Act (AGOA) and in mid-2007 hosted the 6 AGOA Forum.
U.S. democratization assistance to Ghana supports decentralization efforts and greater citizen
participation in governance, notably at the local and regional level; improved parliamentary law-
making and oversight skills; better local government service capacity; and efforts to build civil
society capacities to influence government policy making. It will also help train election
observers prior to the 2008 elections. U.S. health sector assistance to Ghana focuses on
preventing HIV/AIDS, malaria, and tuberculosis; increasing health services delivery; and
improving state healthcare planning and management capabilities. Ghana became a President’s
Malaria Initiative country in FY2008. Development Assistance programs focus on boosting
agricultural marketing and export potential, small business capacity building, and market
liberalization reforms. They also support policy reforms aimed at supporting macro-economic
stability, liberalizing agricultural input markets, and supporting policy-making capacities related
to finance, labor and land regulation, energy, and information and communication technology. A

185-member U.S. Peace Corps volunteer program pursues diverse projects, mostly in education,

small business growth, environmental sustainability, and healthcare. After widespread flood
damage in northern Ghana in September 2007, USAID’s Office of U.S. Foreign Disaster
Assistance provided $50,000 in emergency relief supplies to 5,000 recipients.
In August 2006, Ghana signed a $547 million, five-year MCC Compact. It supports investments
in agriculture, production, business, and income growth (e.g., increasing exports and value-added
business capacity, and improving irrigation and land tenure systems); in transportation; and
programs to support rural government, social, and financial services. Under the Administration’s

¹³^Hum^a^{n Rig}^h^{ts W}^a^tc^{h, “}^L^ibe^r^ia^{n P}^r^e^s^ideⁿ^{t M}^u^{st Be}^A^rre^ste^d^,”^Jun^e^{4, 2}⁰⁰³^.

Foreign Assistance Framework, Ghana is a “Transforming” state, i.e., one “with low or lower-
middle income, meeting MCC performance criteria, and the criterion related to political rights.”
Under the Administration’s FY2009 budget request, U.S. assistance to Ghana, exclusive of MCC,
Peace Corps, and food aid, would decline to $44.46 million from the recently finalized FY2008
level of $63.85 million. The level of such assistance in FY2007 totaled $42.6 million. Food aid in
FY2007 totaled $18.11 million, and an estimated $6.95 in FY2008. The Administration requested
$4.5 million for FY2009. Food aid levels in the latter two years may rise, as food aid is allocated
from central accounts in response to need throughout the year.
Limited Foreign Military Financing, International Narcotics Control and Law Enforcement, and
Nonproliferation, Antiterrorism, and Demining and Related Project funds support law
enforcement capacity-building and Ghana’s ability to counter its growing use as a cocaine
transshipment point. Modest International Military Education and Training programs support
military professionalism. Ghana was among the first recipients of peacekeeper training under the
African Contingency Operations Training and Assistance program. It acts as a base for periodic
regional U.S military activities, such as crisis response actions or exercises. It also participates in
the National Guard State Partnership Program, which links U.S. states (North Dakota in the case
of Ghana) with partner nations in support of U.S security cooperation and broad bilateral goals.
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