Thursday, October 19, 2017

Ghana

Market Forces and the Rule of Law as a Means of Improving the Quality of Life in Sub-saharan Africa

Paul Sergius Koku

excerpted from: Paul Sergius Koku, Market Forces and the Rule of Law as a Means of Improving the Quality of Life in Sub-saharan Africa: Ghana, a Case of Critical Analysis , 10 University of Miami International and Comparative Law Review 23-35 (2001-2002) (33 Footnotes)

 

In conducting an institutional analysis of Ghana, the objective of this paper is to examine how market forces and the rule of law, specifically, the law of torts and contracts, impact the quality of life in sub-Saharan Africa. The paper focuses on Ghana for several reasons: first, as a former British colony, Ghana's legal system is built on the United Kingdom's legal system and thus benefits from a long-established tradition of recording past cases and deciding current cases by using the common law system of precedent. Second, because Ghana and the United States share a common legal root with the United Kingdom, the Ghanaian system easily lends itself to exposition to non-Ghanaians. Third, as the first African colony to gain independence from Britain, and in many respects, being in the forefront of developments in West Africa, Ghana's economic and political experiences serve as a lesson to many other former colonies.

The rule of law and the free market economic systems are essentially alien to native Sub-Saharan Africans. However, the success of these institutions would be instrumental in improving the quality of life in Ghana. These systems could also restore peace and order to other former sub-Saharan colonies such as Sierra Leone, where legal and market failures combined with the lack of viable alternative systems has plunged the country into a deep civil war.

Several studies have examined the role of free market forces in the economic development of sub-Saharan African countries. For example, one study examined the role of informal financial markets under market liberalization and concluded that informal financial markets continue to serve as an important vehicle for mobilizing household savings. Other studies examined the lack of integration between the different West African economies and concluded that the absence of sufficient infrastructure and a coherent aid policy between the advanced Western nations continue to hamper economic progress in West Africa. Along a separate stream of studies, some political scientists have examined the role of political systems in establishing economic stability, and concluded that assistance to democracy-building organs are instrumental in bringing together acohesive new policy strategy.

These studies have been particularly useful in explicating the political and economic problems facing sub-Saharan emerging economies. However, none of the studies has explicitly examined quality of life issues or the effect of the judiciary on market forces. Additionally, none of the earlier studies addressed the effectiveness of market forces as a mechanism for developing economies of sub-Saharan Africa. The failure of earlier studies to include quality of life issues leaves a big gap that needs to be filled. After all, isn't the ultimate objective of a country's economic system to improve the quality of life for its citizens?

Furthermore, legal and educational systems directly affect the operations of market economies. Thus, the failure of earlier studies to explicitly address the role of the judicial and educational systems in ensuring the effective operations of the market system economies in sub-Saharan Africa makes those studies amenable to extension. A cursory examination of anti-trust and anti-collusion laws in the United States clearly shows how the legal system serves as the grease that oils the cogs of the market system. The ability of the market participants to enlist the help of the law in instances where a participant's behavior violates prevailing norms illustrates the virtue in both the educational and the legal systems working together to ensure the operations of the market system. However, it must be noted that the judicial system is inextricably tied to the political system, thus an orientation to either democracy or socialism could either enable or disable a properly functioning judiciary.

By examining pre-colonial and postcolonial institutions this study analyzes how markets forces operate within the Ghanaian economy to assure an improved quality of life. Specifically, the effect of the current economic forces on the citizens is illustrated by looking at current judiciary and market systems and contrasting them with pre-colonial institutions. The educational system is also worthy of analysis as an important factor that allows the citizens to transcend the confines of past social and institutional structures and move into the present. Some observers might consider literacy as a mundane issue to the effective functioning of the economic system, but the opposite is true. In fact, literacy is essential in assuring an improved quality of life, because it serves as a critical bridge between market forces and tort and contract law.

Like Sierra Leone, Gambia, and Nigeria, the Gold Coast (the colonial name for Ghana) was a colony of the United Kingdom until 1957. At independence, the Gold Coast changed its name to Ghana, and inherited the English judicial system, and a developing capitalist economy. However, under its first prime minister, Kwame Nkrumah, Ghana quickly drifted away from the Westminster-type of governance and market economic system, and instead practiced some variant of socialism.

In this respect Kwame Nkrumah was an anomaly; he was educated in the United States and the United Kingdom, and thus expected to be imbued with Western ideologies. However, he was enamored by Marxism and entertained socialist ideas which he quickly put into practice upon his election as prime minister of Ghana. Several reasons have been ascribed to Nkrumah's fascination with socialism. The more persuasive include a) disenchantment with the Western style of governance and the realization that it might not be suitable to a third world country whose culture and ways of doing things are completely different, b) his mistaken belief that socialism was essentially equal to egalitarianism, and as such would serve as a more practical means of bringing about social equality, and c) his mistaken belief that socialism would help the newly independent nation to a more rapid andefficient development its natural resources.

Nkrumah's flirtation with socialism led to the depletion of the country's positive balance of payment position, the depletion of the country's foreign reserves, an acute shortage of so-called "essential goods," and massive corruption amongst government officials.

The situation became intolerable. As a result, the country witnessed its first coup d'├ętat in February 1966. Thus, in addition to being the first British colony in Sub-Saharan Africa to achieve independence, Ghana also acquired the unenviable reputation of being the first country in sub-Saharan Africa to experience a coup d'├ętat. The 1966 coup was the first in a series of several military interventions in the governance of Ghana. To make themselves popular with the citizens who regarded the military as warriors and not rulers, the military often implemented price controls, and nationalized foreign corporations. However, to its credit and as a result of Western pressures, after each intervention the military returned the reigns of government to pro- West democratic regimes that implemented free market economy policies.

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