Ghana’s Development Dilemma: A Legacy of Mistrust in Local Enterprise

The Ghanaian Suspicion: A Long History of Broken Trust

Why is there so much distrust of domestic businesses? This question, I believe, goes to the heart of Ghana’s persistent development puzzle.

Before independence, the Gold Coast boasted a budding indigenous capitalist class. Records from the 1920s to the 1940s indicate that African-owned trading companies controlled as much as 30 percent of the cocoa buying trade and participated competitively in shipping, transport, and local manufacturing.

The colonial administration’s reaction was predictable. The state imposed regulations, licensing, and price arrangements that effectively squeezed indigenous buyers out of the cocoa trade, rerouting commerce through expatriate firms. The result was the destruction of a nascent bourgeoisie that could have become the backbone of modern Ghanaian capitalism.

This historical context created a long institutional memory where the state became accustomed to viewing African private enterprise as something to be supervised rather than encouraged. More damagingly, it taught citizens a profound lesson: they internalized the idea that private wealth emerges not from production but from preferential access to the state. This perception has had lasting consequences.

The Trauma of 1979 and Its Echoes

Then came the 1979 AFRC period under Rawlings, which reproduced the same logic but with domestic actors now turning on domestic business owners. Executions, property confiscations, and public humiliation of businesspeople were justified under the language of moral cleansing. Yet, the economic damage was catastrophic.

According to surviving trade records, more than 400 locally owned enterprises collapsed or fled during 1979 to 1982. The Textile, Timber, and Light Manufacturing sectors lost over 60 percent of indigenous ownership in a span of three years. The state replaced productive private firms with politically controlled enterprises that, in many cases, became loss-making from inception.

It was the worst possible lesson for a society striving to build trust. Instead of demonstrating that the rule of law protects productive effort, these events showed that the state could swing violently against individuals if they became visible. Ghana still bears these scars. Many Ghanaian entrepreneurs today deliberately stay small, obscure, and informal because visibility is perceived as risky.

This situation produces what I call a mid-trust equilibrium. Trust is not entirely absent; people do business. However, they do not scale their operations. They operate with extreme caution because political power can intrude at any moment. Citizens simultaneously desire private productivity but fear private accumulation. Consequently, every successful enterprise triggers suspicion that the owner benefited from a hidden state favor. The logic becomes circular: when citizens believe wealth comes from political access, they oppose state support for indigenous firms, assuming it’s corruption. This opposition then reinforces political actors who prefer to build state-owned enterprises so they can capture the rents themselves.

The constant creation of state enterprises to compete with private firms is a symptom of this mid-trust equilibrium. The idea of a government-built Uber clone, for instance, is not primarily a technical proposal. It is often a political performance of distributive fairness, signaling that no private actor should earn too much in a manner that threatens the fragile psychological balance between success and suspicion.

Beyond National Character: A Structural Problem

We often ask whether Ghanaians are predisposed to using government as a tool to extract rents from their own people. I would frame it differently. In societies where institutions are weak, the state often becomes the only dependable lever of power. In such environments, citizens come to see the state not as a neutral arbiter but as the great dispenser of opportunity. That perception invariably produces envy. When one company rises, it is seen as consuming more than its fair share of the public opportunity space.

This issue is not fundamentally cultural; it is structural. Countries like South Korea and Taiwan faced similar resentments in the 1960s when the state supported early chaebols. However, because the state simultaneously built strong administrative systems and enforced competition, public suspicion gradually reduced. Citizens learned that private wealth could be earned legitimately and that a rising firm expands the national economic pie.

Ghana, unfortunately, has never made that institutional leap. The result is a nation where success is always provisional and where the boundary between legitimate enterprise and perceived rent extraction is blurred. Citizens respond with envy partly because the system itself encourages them to.

The tragedy is that Ghana’s capitalism is stillborn not because its people lack talent, but because its institutions produce the wrong incentives. When indigenous firms disappear every decade, when entrepreneurs live in fear of becoming too visible, and when state actors treat private success as a threat to their political capital, you get a political economy dominated by mid-trust and chronic suspicion. This destroys investment, kills long-term planning, prevents local firms from growing into national champions, and keeps the society locked in a low-growth, low-trust, low-innovation equilibrium.

The Deeper Question: Building a Productive Capitalist Class

What I am truly asking is how Ghana can ever build the kind of capitalist class that drives development in every prosperous country. The answer is simple yet profoundly difficult. The society must shift from a distributive politics mindset to a production politics mindset. This requires transparent institutions, depoliticized contracting, consistent rule of law, and a cultural shift in which wealth earned through enterprise is seen as legitimate rather than suspicious.

The hard truth is that Ghana does not lack entrepreneurs. It lacks a state and a public culture that can live comfortably with visible domestic wealth. South Korea, Malaysia, and Chile demonstrate that trust around indigenous capital can be built, though never perfectly. The price is institutional discipline, political restraint, and a willingness to openly admit that creating a national capitalist class is a deliberate project, not an accidental byproduct of slogans about the private sector.

Tomorrow, I will carefully and analytically explore the real South Korean story and why it developed ahead of Ghana. We will examine the true political economy of how a poor agrarian country deliberately manufactured its own capitalist class, firm by firm, family by family.

If you want to understand the Ghanaian development dilemma — our reflexive mistrust of indigenous firms, our public hostility to domestic entrepreneurs, and our readiness to cheer when political actors cripple local businesses — you must begin with history. Not the shallow version taught in civics class, but the deeper structural forces that have shaped our institutions, our political psychology, and our collective memory of economic power.

This mistrust did not fall from the sky. It was manufactured, slowly and painfully, by a century of institutional traumas that taught Ghanaians to assume that every successful indigenous firm must be corrupt, politically protected, or predatory. And that any state support to such a firm must be a theft from the public purse. We have major work ahead of us.

~ Hene Aku Kwapong, CDD Ghana Fellow, Founder – nbosi.org, former SVP – New York City Economic Development Corporation.