President Rawlings (1992-2000)
Corruption levels in Ghana soared during the Rawlings regime. The government of 1981-1992 was oppressive. Ex-President Jerry John Rawlings, then head of state, ruled the country with an iron fist. In 1983 he adopted conservative economic policies that worsened the Ghanaian economy; he removed all price controls and privatized state enterprises. In this way private entrepreneurs could sell scarce goods and services at inflated prices to consumers. As wage increases did not follow the inflation of prices, the living standards of most Ghanaians fell and poverty pervaded the Ghanaian economy.
Privatizing the state firms led to competition between firms. The firms
increased profits by producing with a minimum labors force; many workers
were laid off as a result, and unemployment levels dramatically increased.
Additionally, corrupt members of the Rawlings’ government sanctioned
Bank of Ghana, the central reserve, to increase their levels of cedi
(Ghanaian currency) production. This increased the level of local currency
in comparison to foreign currency in the economic system and resulted
in the devaluation of the cedi to 9000 cedis to $1 (1 cedi to $1 before
independence).
The Cedi: 10,000 cedis today is equivalent to 1 cedi in Nkrumah's time
Furthermore, appalled by the government’s policies, some of the more knowledgeable members of the Ghanaian community left the country. Others perceived to be ‘enemies’ of the government were either exiled or executed. This ‘brain drain’ deprived Ghana of economic and political reformists whose analysis of the economy could have possibly resulted in solutions to the economic problems facing the country at that time.
Finally, most local and foreign businesses, then providing citizens with
jobs and fueling the economy, were closed down due to the inconsistent
fraudulent economic policies implemented by the government. Foreign investments
from Europe also decreased, while foreign spending increased; more money
left than entered the economy. In this way, the Ghanaian economy, passed
over to J.A. Kuffour after the December 2000 elections, was in chaos.