Recession in the West Cuts Off An Economic Pipeline in Ghana

By Karin Brulliard
Washington Post Foreign Service
Wednesday, August 5, 2009

ADUASE, Ghana -- When the U.S. housing crash triggered economic chain reactions around the world, one ended in a lush forest near this village, where on a recent day Emmanuel Awatey was tapping his machete on a log that he very much wanted to chop up.

In previous years, Awatey would have done just that, and then carried the wood on his head to the red dirt road nearby. A truck there would have ferried it three hours to the Tekura handicrafts workshop in Accra, Ghana's capital, where it might have been carved into a stool by an artisan, then shipped duty-free to the United States, then sold at Cost Plus World Market for display in an American home.

But the U.S. housing market and the global economy collapsed. And so has work for Awatey, the carvers and others working what had been a thriving pipeline from Ghanaian rainforest to American retail.

"If work comes tomorrow, we will head to the forest," said Awatey, 44, a sinewy subsistence farmer who, like others in his village, used to make as much as $25 a week chopping and carrying cedrela wood for Tekura. "But it all depends on the ones who bring the work."

'Wiping Out' the Vulnerable

The financial crisis has checked demand for African commodities, slowing the continent's economies. Less visibly, however, it has also stunted small African exporters who had become fledgling trade success stories -- and micro-level poverty busters -- in a region often associated with gloom.

In many cases, these exporters were lifted by a decade-old U.S. program meant to promote economic development through duty-free access to American markets. Now a U.S.-triggered meltdown is erasing many of the gains.

"We had small- and medium-sized businesses that had so much hope. They invested capital, they took loans. And the rug has been pulled out from under them," said Rosa Whitaker, a former assistant U.S. trade representative for Africa and architect of the program, the African Growth and Opportunity Act, or AGOA. "It's wiping out some of the world's most vulnerable people."

In the first quarter of this year, AGOA exports from sub-Saharan Africa to the United States, including oil, plummeted 59 percent, while non-oil exports such as textiles and agricultural products dropped 22 percent.

Secretary of State Hillary Rodham Clinton is set to discuss the program, which expires in 2015, at a forum Wednesday in Kenya as part of her seven-country trip to Africa.

Ghana's overall economy has remained steady because of strong prices for its cocoa and gold. But exports under AGOA dropped by more than one-third in 2008, and fell 86 percent, to $5.2 million, in the first five months of this year. While much of the plunge came from a fall in exports of foreign oil processed in Ghana, it also reverberated through particleboard factories, mango farms and jewelry studios.

As in many sub-Saharan countries, Ghanaian textile and apparel exporters have been particularly hard-hit, including some that U.S. officials once touted as AGOA poster children. Among them is Prosper Adabla's formerly humming factory near Accra, which manufactured tube socks for export.

An end to worldwide quotas on Chinese apparel exports in 2005 brought stiff competition. Two years later, Adabla's U.S. partner went bankrupt. Adabla shut his factory last summer, leaving $1 million worth of socks unsold and 1,000 workers jobless.

"The demand has dried up, number one. Number two, the partners have either gone bankrupt or are no longer in business or have decided to buy from China," Adabla said. "AGOA gave us an option . . . but if you can't sell your product, it's useless."

Few Ready for Tough Times

Ghana's small handicrafts industry, which was already expanding because of free-market reforms meant to grow nontraditional exports, got an additional boost from the program and then another from a booming U.S. housing and consumer market.

Earlier this decade, big American retailers such as Pier 1, World Market and TJ Maxx were snatching up handmade candleholders and baskets from Ghana. When Target ordered hundreds of thousands of dollars worth of goods from Tekura and other enterprises in 2004, hundreds of rural carvers won work chiseling African art for American abodes.

But most of the orders dried up by the end of 2007. Spokesmen for Pier 1, TJ Maxx and World Market did not respond to or declined requests for comment, but retail analysts say the explanation is evident.

In an era when retailers are trimming inventories, cutting price points and closing stores, African accessories count as luxuries, said Nick McCoy, an analyst with RetailForward in Ohio.

Robert Ellis, whose Fritete African Art Works was the forerunner of Ghana's handicrafts exporters, said cracks in the industry began showing before U.S. and world financial woes. Asian factories were making cheaper copies. Ghanaian artisans were not updating their work often enough. And when demand fell, he said, few had built a foundation to get them through tough times.

Ellis, who proudly shows off a 2005 Target ad touting "AFRICAN DESIGNS 14.99 -- 79.99" that includes his rustic wood table, watched his export sales drop from $305,000 in 2007 to $70,000 in 2008. Six muscular carvers now toil in his wood-strewn workshop, down from 150 in December.

He has sold property and paid off debts, and he says he thinks he can survive the crash. Smaller Ghanaian producers, he said, "will need a miracle."

AGOA has never become a silver bullet for micro-enterprise in Africa, whose share of global trade is just 2 percent. Ninety percent of exports under the program still come from oil, though non-oil exports have tripled since 2001.

Small businesses complain about the program's byzantine guidelines and say U.S.-provided training is not tailored enough. While some African governments saw the program as an opportunity and created export-friendly policies, others ignored it. More generally, poor roads and power supplies hinder commerce, and little companies cannot afford the 30 percent interest rates that African banks typically slap on long-term business loans.

In Tekura's quiet offices on the muddy outskirts of Accra, Josephine and Kweku Forson said they are waiting out the storm. Their sleek stools and masks -- all made from trees cut as part of government reforestation programs -- are gathering dust. Sales fell in half from 2007 to 2008 and are on track to fall another 60 percent this year.

In the sawdust-filled workshop on a recent day, Kwabena Appiah, 25, was one of just 10 artisans on duty. He was lucky: The Forsons said that they had regretfully let go more than 100 workers, and that they were especially worried about the woodcutters in the forest.

Out in Aduase, a tiny settlement where goats scurry about, those 20 or so woodcutters were once again getting by on their cassava and plantains. The clothes, haircuts and even rat poison they purchased with the extra income were on hold, Awatey said.

The woodcutters said they had no idea where the trees they chopped ended up after they left Ghana. But they said they knew why the wood was staying put for now.

"Because of the recession," said 32-year-old Paulina Ohenewaa, "there are economic problems everywhere in the world."

Obama in Africa: A Major Disappointment

By Gerald Caplan

July 13, 2009

This article is based on a piece which originally ran on The Globe and Mail.

As expected, President Obama used his twenty-four-hour trip to Ghana to send messages about his thinking and his priorities for Africa. This was a moment that progressives involved in Africa have been waiting for, hoping for some clear thinking about Africa's many challenges and the American role in addressing them. On the basis of his interviews and speeches, they will be sorely disappointed. Once we get beneath the eloquence and style, it's hard to point to anything in any of his remarks that couldn't have been said, however inarticulately, by George Bush.

In one interview, Obama, with no false humility, stated that "I'm probably as knowledgeable about African history as anybody who's occupied my office". No question that's true. Still, the bar in that particular competition was not exactly set very high. And as his various comments demonstrated, he's not nearly as knowledgeable as he thinks he is. Much of what he believes about Africa and how it can meet its many challenges is simply wrong.

At every opportunity, the President emphasized internal African causes for the continent's woes, highlighting especially the need for good governance and ending corruption. So he argued, for example, that "you're not going to get investment without good governance." That's just wrong. For decades most foreign investment in Africa has gone to South Africa first, even under apartheid, and then to such oil-rich nations as Angola and Nigeria. First and foremost, western companies, backed energetically by their embassies, are after Africa's resources--oil, gas and to a lesser extent minerals. These are the very sectors where we find vast corruption, environmental degradation, the vicious exploitation of African labor, and, often enough, Africa's wars. In no case does good governance play a role in investment decisions. Often enough venal leaders are precisely what investors look for.

Similarly, Obama insisted that business won't invest where "government officials are asking for 10, 15, 25 percent off the top." That's an illogical assertion. If foreign businessmen weren't only too eager to play the bribery game, those African officials couldn't get away with demanding a cut off the top. Nigeria, Angola, South Africa, Kenya, Cameroon, Congo--everyone knows how to get a contract in these and other countries. Which also should remind us that high-level corruption in Africa could not and does not happen without intimate western collaboration.

Obama's repeated insistence on this theme of good governance and corruption is somewhere between ironic and farcical, given the eight African leaders who were invited to last week's G-8 summit. Five were from sub-Saharan Africa, three from North Africa. Every one of them is ranked poorly or abysmally in Transparency International's 2008 Corruption Perceptions Index. Seven of the eight are considered only partly free or not free by Freedom House in 2009; only one (South Africa, led by the deeply corrupt Jacob Zuma) is deemed free. It was an important if inadvertent lesson: Corruption and poor governance are indeed widespread, if not quite ubiquitous, across Africa, and the west cheerfully plays footsies with all those governments.

Obama says there is "a direct correlation between governance and prosperity." That's why he chose democratic Ghana for his first official state visit, rather than his father's country, Kenya. Heaven knows that the ruling parties in Kenya are brazenly corrupt and dedicated to little beyond enriching themselves and their supporters. Ghana, on the other hand, after years of bad governments following the CIA-backed coup that overthrew its first president, Kwame Nkrumah, can now be said to be fairly stable and democratic (though hardly free of corruption). Obama knows lots of interesting things. When his father left Kenya in the early 1960s to study in the USA, he noted, the GDP of Kenya was higher than that of South Korea; today, Korea is one of the world's great economic success stories, while Kenya languishes.

The UN's Human Development Index backs this up. In 2008, of 179 countries listed, Korea was ranked an impressive twenty-fifth while Kenya was 144. But the President should look at these ratings more closely. Despite good governance, and though some real progress is being made, Ghana was ranked 142, virtually tied with Kenya among the bottom 20 percent of the world's nations. Something else must be going on here that accounts for this depressing situation because Obama's analysis can't.

Here's the heart of his diagnosis,: While the international community "has not always been as strategic as it should have been [regarding Africa]...ultimately I'm a big believer that Africans are responsible for Africa...for many years we've made excuses about corruption or poor governance, that this was somehow the consequence of neocolonialism, or the West has been oppressive, or racist. I'm not a believer in excuses."

This is really a startling argument for the head of a country whose great political battles still rage around the meaning of its Constitution, adopted in 1787 while the slave trade still raged, and whose personal inspiration comes from a predecessor who was murdered in 1865, twenty years before formal colonialism began in Africa. To dismiss the slave trade and a century or more of colonial rule, to minimize the impact of neocolonialism by France and the US, to ignore the incalculable decades-long damage done to Africa as a pawn in the cold war--all of this seems to requite willful blindness in order to peddle a particular agenda.

Of course Obama's obsession about appalling governance is not wrong; I share it completely. Africans have for decades been betrayed by a veritable pageant of monstrous leaders, one more egregious than the other. But another truth is that the United States actively backed almost all of them, and if the US didn't, France did; that's part of the neocolonial record. The west also supplied many of the arms that were used in the appalling internal conflicts that have roiled Africa for so long. Even today, the US, Britain and France continue to remain close to many African leaders whose democratic credentials leave much to be desired, as the G-8 meeting underlined.

The President raised Zimbabwe to make his case. The West, he is not responsible for the destruction caused by Robert Mugabe and his government. The destruction is only too true. The West's innocence is not.

Had Britain fulfilled its clear obligations and ended white minority rule in Rhodesia/Zimbabwe in a timely fashion, fifteen years of vicious civil war would have been avoided. Instead, the final African victory left the country in the hands of an embittered, vengeful Mugabe. America and Britain were collaborating with the apartheid regime in South Africa at the very moment it was actively working worked to sabotage Mugabe's new government. The IMF forced structural adjustment programs on an unwilling Zimbabwean government, helping to undermine its economy. All this is well known. So is the fact that for the first twenty years of his reign, "Good old Bob" Mugabe was one of the west's favorite "Big Men", blithely ignoring his ferocious oppression of his opponents. Not until he began expropriating the vast holdings of white farmers ten years ago--all of whose land was stolen from Africans during the twentieth century (though not necessarily by the current owners)--did western media and western governments decide he was Enemy Number One. Can Obama know nothing of this record?

"Development depends on good governance," Obama lectured Ghana's Parliament. "That is the change that can unlock Africa's potential." With all due respect to the President, this is malarkey. The reality, which surely Obama grasps, is that for centuries, year in and year out, far more of Africa's wealth and resources pour out of the continent to the rich world than the west provides Africa through all sources, from aid to investment to trade. Good governance will not end this perverse truth.

Beyond that, even if every African country was led by a saint, they could do nothing about the severe environmental and economic damage that global warming--for which Africa has no responsibility whatever--is inflicting across the continent. Obama actually mentioned this in his speech, yet ignores it with his obsessive fixation on Africa's sole responsibility for its problems.

Even the most exemplary African leaders could do nothing about the destructive impact on African development of the present worldwide economic crisis, for which Africa has no responsibility whatever.

No African leader has the slightest influence on the drastic increase in food prices that is causing such suffering, including outright starvation, to millions of Africans.

Even a continent of Mandelas couldn't change the massive subsidies that western governments provide to their agribusinesses. When they're in Ghana, the Obamas should do some comparison shopping. They may be taken aback to find that it costs more to buy a locally-bred chicken than a subsidized one that's been shipped frozen all the way from Europe. To this, Obama reassured his Ghanaian hosts, "America can do more to promote trade and investment."

And nothing can be done about the enormous damage already done to Africa by the destructive neoliberal policies that were imposed on African governments by the World Bank and IMF over the past thirty years. Even today, while their rhetoric has changed, these institutions, deeply American-influenced, continue to insist on discredited policies that have failed to promote growth while vastly increasing inequality.

None of this was tackled by Obama. For him, the relationship between Africa and the rich world is a one-way street. Africans are screwing up, and if they want more American aid, they've got to get their act together. This is the Obama analysis--simplistic, myopic, patronizing, implicitly threatening, just what we expected and got from George Bush. Like Bush, evidence based-reality takes a back seat to whatever reality a president chooses to concoct.

For the past decade, it's been widely agreed that the US has three overriding interests in Africa: exploiting natural resources, above all oil and gas; fighting Islamists; and competing with China. In all cases, Africa is merely a pawn, something to be used to pursue America's interests, not Africa's. African development and everything related to it are secondary matters. Substantively, nothing Obama has committed himself to alters these priorities, especially his strong endorsement of the suspiciously vague new US military command structure for Africa, called AFRICOM. But the Americans have been unable to persuade a single African country except ever-cooperative Liberia to host the base for this structure, all fearing the increasing militarization of US-African relations. Given that they're a gang of corrupt leaders who govern poorly, this should surely send Obama a pretty clear message.

I documented the case against the Obama analysis of Africa in a book published last year, The Betrayal of Africa. It demonstrates the twin burdens that actually account for Africa's condition--their own wretched leaders combined with destructive western policies and practices. I know the President is a pretty busy guy, but it's a short book and he clearly enjoys reading and learning. Unless he learns what's really going on in Africa, his administration will become yet another in an endless line that has caused Africa more grief than good. Hard to credit, but yes it can.

About Gerald Caplan

Gerald Caplan, a Toronto-based researcher-writer and activist with a Ph.D. in African history, is the author of Rwanda: The Preventable Genocide and The Betrayal of Africa.