– The Impact of Globalisation on the Ghanaian Economy- Part 2

By Kwesi Atta Sakyi

6th March 2013

The brain drain is the exodus or emigration of professionals from one country to another in search of greener pastures. Ghana is one of the classical examples of countries in the world which has been severely hit by the haemorrhage or loss of human capital to the first world. Every year, Ghanaian nurses, medical doctors, engineers, IT specialists, university professors, laboratory technicians, pharmacists, lawyers, teachers, among others, leave the country in droves to head for first world countries such as the USA, UK, Australia, Canada, Germany and France.

Some of these émigrés are frustrated at home by bureaucracy, bribery and corruption, misgovernance, lack of job satisfaction, nepotism in promotions, poor perquisites and poor conditions of service, among others. During the Structural Adjustment Programme in the 80s and 90s, the exodus hit its peak when the stato-military khakistocracy ruled by decrees, and they made life horrible for many professionals who found it hard to cope with uncouth revolutionary zealots, operating under the People’s National Defence Council (PNDC) and the Armed Forces Revolutionary Council (AFRC), with the Committees for the Defence of the Revolution (CDRs).

Those CDRs unleashed a reign of terror on professionals as they resorted to intimidation, kangaroo courts, witch-hunting and acts of hooliganism. In resignation, most professionals decided to vote with their feet out of the country. Some headed for more stable and prosperous African Countries such as Gabon, Botswana, Namibia, South Africa, and Nigeria. It may be wrong to condemn all those professionals who left Ghana, and brand them as unpatriotic or mis- patriots. What do we see now? In the last decade or so, inward remittances from the same Ghanaian professional Diasporeans, as well as semi-skilled and unskilled Ghanaians, have constituted the second largest foreign exchange earner for Ghana in the form of invisible exports. This soft export from human capital investment, speaks volumes. One, it shows how Ghanaians abroad love their country and their relatives back home.

Here, we can reflect on many of our proverbs as well as our cultural symbols such as Sankofa (literally meaning go back and retrieve). There is an Akan proverb which states that when a trap snaps, it falls back to its original place. I guess the English equivalent is,’ East, west, home best’. There are many Ghanaian men abroad who have left their wives and children in Ghana for obvious reasons of cash constraints, visa problems and the need to keep the hearth at home burning and warm. As such, Ghanaian men working out there, be it in Israel, Turkey, Cyprus or Iceland, makes sure that every now and then he sends money home to pay rent, school fees, upkeep of the extended family, and to defray funeral expenses of loved ones who have passed on. Imagine the multiplier effect of all these remittances on the Ghanaian economy. These remittances are mostly directed at the informal sector or Small-scale and Medium Enterprises (SMEs).

Because of these remittances, many school drop- outs have found employment in the informal sector, some as taxi drivers, internet café operators, shopkeepers and concrete block-making enterprises which support the booming construction and estate development industry. Many of the transport vehicles, internet cafes and business centres are owned by Diasporeans. Of course, not all Ghanaians abroad do think of home, as some have neither sent money home nor gone home for decades since they journeyed abroad. This group is negligible. Ghanaians are very proud of who they are and where they come from. It is the dream of every Ghanaian who travels abroad to accumulate some capital so that he can establish some businesses back home. It has not been so easy and rosy as some of them have been badly let down by their own relatives back home who sometimes squander the remittance and they do not use the money for the intended purpose.

In Nigeria in the 80s, I used to know two friends who were teachers and they later became businessmen. They would travel to Lagos and collect remittances from all who wanted to send monies to their relatives in Ghana. They would use the money to buy goods in Lagos and go to sell in Ghana and later refund the money to the relatives. They were faithful but the remittances delayed. Some of us were posted to very remote villages in Nigeria to teach so we could not operate foreign accounts like our friends in Lagos and other cities did. Those fortunate ones used to operate foreign accounts with the defunct Meridien BIAO Bank in Lome. They used those accounts to send remittances to their relatives in Ghana or transfer monies to London. In those days, there were no internet or mobile phone connectivity and we used to send money home through friends who acted as couriers. Sometimes, we used postal and money orders or telegraphic transfer. Those were very slow, expensive and cumbersome, compared to modern methods of money transmission through Western Union, MoneyGram and Paypal.

I remember in December 1981, I gave a cheque to one of my teacher colleagues to collect my salary in Nigeria and bring to me in Ghana. Unfortunately for me and perhaps fortunately or unfortunately for him, there was the coup d’etat in Ghana and he got stranded in Lome. I was informed on good authority that he hooked a strange girl and finished my pay packet on turkey-tail delicacy, Bierre du Benin, and on his paramour. I never got my money back when we all resumed in Ogun State at our school. I bet, I had one of the worst Christmases ever in Ghana. At another time, a colleague concealed money in an envelope and gave me to send to his relatives in Agona Aboso in Ghana. I travelled by road, and at the Seme Border Post in Nigeria, the Customs Officials searched all my belongings, tore open the envelopes with remittance money and confiscated it to my chagrin and discomfiture.

I had to bear the brunt of that loss. Recently, in 2010, some four Ghanaians, some of whom are working for International Governmental Institutions, gave me money to send home to relatives. I became overwhelmed and asked why they would not use Western Union or the banks to transfer their monies. You know, Ghanaians do not want to pay money transfer fees. Besides, in a country such as Zambia, you cannot transfer more than 1000 dollars a day through Western Union. When I lived in Lagos in the 80s, I found a posse of Ghanaian prostitutes living in a pent house close by where I stayed at Ikeja. One of them made me her letter writer. She confided in me that she was the one paying the school fees of her sister’s children in Ghana.

Besides, she was building in Ghana and as such, she often bought building materials in Lagos and dispatched them home by road. I have a friend here in Lusaka who used to stay in London for some years. He tells me he used to have another Ghanaian in London who used to operate his personal money transfer system. You called on his mobile phone, gave him the details of whom to send a certain amount to and it was done within minutes. You paid him when you got paid. In Zambia, you can send remittance of 1000 dollars a day through Western Union to any destination in the world, but through the banks, you can send up to 5000 dollars maximum.

Right now, the Zambian government has a bill in parliament to regulate the money transfer market, which is a very sad development as it is retrogressive and may be counter-productive in wooing foreign investors. It is sadly enough, taking many steps backwards to the old era of market strangulation, black markets, and all the ills of foreign exchange shortages. This is despite the gains made by liberalizing and denationalizing and sanitizing the market. Market intervention may be necessary at times, but not through stifling statutes.

This is why we have fiscal and monetary instruments such as interest rates, taxes, cash reserve ratio, among others. Before the internet became popular, I remember some friends telling me that they used to send money to Ghana through the courier services such as Fedex, DHL, EMS, UPS, among others. It was illegal then, but they risked it. Many conflicts rocked friendships where human couriers were used, because some of them were unfaithful as they, one way or the other, made use of monies which they were to pass on to remittees in Ghana. Had it been this day and age, the remitters would not have sent their remittances through human couriers, as that mode often posed moral hazards and risks. We doff off our hats to that Ghanaian whose efforts and vision led to the establishment and spread of Western Union Agencies throughout African Countries.

It is only South Africa which resists the establishment of money transfer outlets in their country. What a selfish country! Once in the 90s, a friend borrowed money from me and went to ply his teaching job in South Africa. When I asked him to pay me back using Western Union, he told me that there was no Western Union outlet in South Africa and the only means he could send the money to me would be to send it per a human courier who was coming my way in Zambia. If we take Ghana as of now, we realise that Ghana’s economy is one of the most liberalized and open in Africa.

In Accra, one can walk into one of the numerous foreign exchange bureaux and transact business to any amount without your identity being checked or a ceiling being put to the amount you can deal in. Not so in Zambia or South Africa. Perhaps, these two countries in Southern Africa regulate the market in order to stabilize the value of their local currencies, the Kwacha and the Rand respectively. I think that Ghana has taken liberalization to the maximum and it is yielding positive dividends by way of huge inward flow or remittances and the tremendous boom in the estate and construction industry. This model of economic growth is a novelty which needs researching into. Nobody is worried about capital flight or a depreciating cedi. Of course, a depreciating local currency has its own advantages as it attracts lots of tourists, who find it cheaper to buy Ghanaian goods. Besides, it makes our visible and invisible exports cheaper to our trading partners. All things being equal, they are bound to demand more of our exports, and we, less of imports.

Thus, in the long run, we are supposed to have a healthy balance of payments surplus. Unfortunately, not all things are equal in the Ghanaian case, with our unbridled penchant and craze for imported foreign goods such as Dutch Java wax prints, cars, meat, fish, rice, apples, among numerous items. It is crystal clear that there is a huge market gap in Ghana to be exploited in these areas. Our brothers and sisters abroad who have business contacts or their own capital, can come home and establish commercial farms, set up plantations, orchards, fish farms, livestock and poultry farms, among others, to fill the yawning market gap. I see no sense for some Ghanaians in Zambia to engage in farming in places like Kabwe, Solwezi and Kasempa, while they could have done the same in Ghana at a much lower cost in terms of obtaining resident permits, annual company taxes, among a raft of problems connected with doing business abroad. The Chinese immigrants in Zambia are not helping matters.
While locals sell chickens at 6 dollars each, the Chinese are said to be undercutting local poultry farmers by selling their chickens at 1 dollar less, and their chickens look far bigger with allegations that they inject them with penicillin to boost their growth. While locals are selling a concrete block for about 1.50 dollars each, the Chinese in Lusaka are undercutting the price by selling it at 70 cents. Do we then say that the presence of Chinese in a country sets the competition very high, sometimes driving down local SMEs? The Chinese come from their country with cheap loans from their state- capitalism, and they can create entry barriers for local businesses. This is why in some countries such as Zambia, the investment law has reserved certain industries for indigenous Zambians.

For example, foreigners cannot engage in the taxi and bus transport services unless they partner with Zambians who should own the majority shares or alternatively, if the foreigner can show investment capital of not less than half a million dollars. Other nationals from Africa who send a lot of remittances back home to their respective countries are from Zimbabwe, Somalia, Eritrea, Uganda, Ethiopia, Mali, Senegal, Nigeria, Angola, Rwanda, Congo DR and Egypt. Some of these mentioned countries had at one time or the other, experienced the ravages of civil and internecine wars, famine, political instability and other forms of deprivation caused by human action as well as natural causes.

Some Internally Displaced Persons (IDPs) made it to the First World, and they have managed to set up their own SMEs in those first world places like New York, London, Paris, Amsterdam, Minneapolis, among others. Senegalese, Malians, Somalians and Nigerians lead the pack. These send monies home to their siblings for them also to start trading. The Ibos in Eastern Nigeria and the Kwahus in Ghana are using capital received from remittances to take to the skies, to go trading to Dubai, Thailand, China, Japan, Malaysia and Indonesia. I have encountered many of these enterprising and hardworking and budding young entrepreneurs in Addis Ababa. Most of these business travelers prefer Ethiopian Airways which has wide global connectivity, cheaper fares, generous excess luggage allowance, high safety record, and tolerant aircrew who are customer-centred. Ethiopian Airways also runs their Sheba Miles promotion which once a while, to the frequent traveler, it entitles you to a free ticket.

I have personally travelled several times to Ghana on Ethiopian Airways, and I must say that they are indeed a budget as well as middle class airline with a big bang. They cater for all classes of travelers without discrimination, and they satisfy all the 7Ps of service quality, in terms of having competent and professional staff, bigger and spacious state-of-the-art aeroplanes, fool proof security checks at their terminals, varied product range, customized services, high level brand visibility, and above all, the exceptional discipline shown by all their workers.

Remittances to Ghana and elsewhere have helped to create an emerging middle class in Ghana, made up of workers and small scale entrepreneurs. The Ghanaian financial market is very vibrant with a lot of Nigerian Banks offering numerous customized products in the form of micro finance. The model of Muhammed Yunus, the originator of Grameen Bank and microfinance in Bangladesh, has been successfully replicated in Ghana. Some of these banks receive remittances from Ghanaians abroad who have opened accounts back home in Ghana because foreign banks offer pitiable interest rates, not exceeding 2% p.a.

Many market women, teachers and government workers have a field day in Ghana as they can borrow lots of money to build houses or set up their businesses. It cannot be denied that some of the numerous SMEs in Ghana have been funded by monies received from remittances. However, with many of the big first world economies such as USA, UK, Italy and Spain going through rough economic crunch blues, it is doubtful whether the stream of inflow of remittances to Ghana can be sustained. Some of the Diasporeans in those western countries are contemplating relocating back home and some from the USA and UK have already arrived back home.

However, in the oil-rich Middle East and in the Asian countries, their economies are booming. In 2013, the World Bank estimates that Asia alone will receive a whopping 400 billion dollars worth of remittances from their nationals abroad. There are many Chinese, Indians, Pakistanis, Phillipinos and other Asian nationals spread over the four corners of the globe. Some of them are business tycoons or highly skilled professionals. These are sending to their respective countries, huge sums of money in the form of remittances. Who then can argue that the brain drain is a bad thing? To me, the brain drain in the long run is a brain gain. Apart from the gain from remittances, émigrés who return home come with a lot of experience and expertise as well as innovative ideas to help rebuild their countries. These are the long term benefits which compensate for the short term losses from losing their services.

The returnees have a lot of business contacts abroad which they can tap into and exploit to set up booming businesses back home. Take for example, the IT guru, Mr Awuah, who returned from the USA to establish Ashesi University in Accra, Ghana. We have Francis Akoto, the initiator of the online media site, ghanaweb. He schooled in Finland and he set up this useful resource in partnership with people in the Netherlands, USA and Finland. The ghanaweb internet site keeps Ghanaians abroad informed of developments back home. It also alerts Ghanaians abroad of evolving or emerging business opportunities back home.

The internet and internet media websites, along with the mobile phone connectivity are driving the globalization process for many Ghanaians. Many Ghanaians abroad are empowering their relatives back home by sending them cell phones and computers to keep them in touch with one another. One downside of remittances is that some Ghanaians abroad sacrifice a lot to send money home to impress their relatives. Yet, many of these remitters lead horrible lifestyles, staying in cold, damp and derelict basements, working abnormal hours and denying themselves of many personal comforts. In my own opinion, this is the third wave of self- imposed slavery, after the ignominious slave trade era, and the period of colonialism which followed it.

It cannot be denied that some Ghanaians abroad also engage in illicit and illegal activities such as drug trafficking, car theft, fraud and other vices. There are some who engage in money laundering. A lot of these bad eggs or black sheep are those who did not have a higher education up to the tertiary level but forced their way to travel abroad. To survive, they fall prey to crooks and criminals and they want to make a quick buck and run home to show off to their friends back home. Some are unlucky and they end up languishing in foreign jails. Should remittees back home take time to ponder over the risks remitters face abroad, they would think twice before they abuse any remittances they receive through MoneyGram or Western Union.

Information communication gap between remittees and remitters has been bridged, helping to drive economic growth in Ghana. The menace or moral hazards connected with human couriers are now a thing of the past. Perhaps, economic growth by remittances or inward capital inflows from Diasporeans is an economic model which needs to be explored further. The Ghanaian case is a glaring example. It has to be noted however, that the Ghanaian case is no exception. In the past, émigrés from Italy, Holland, Greece, Ireland and Lebanon, have sustained families in their home countries and the Ghanaian case is no exception. The same can be said of Nigerians, Ugandans, Malians, Senegalese, Somalians, Eritreans and Ethiopians in the Diaspora.


The author is a Senior Lecturer at the Zambia Centre for Accountancy Studies in Lusaka, Zambia. He holds a B.A (Hons) degree from the University of Ghana and an MPA degree from the University of South Africa. He is a freelance writer and contributor to many online media websites.
Contact: kwesiattasakyi449@gmail.com