Kofi Busia

Kofi Busia was Ghana’s prime minister from 1969 until he was overthrown by the military in 1971. His government’s economic crisis and the political consequences of a currency devaluation illustrate why, in the book’s account, harmful policies cannot be explained simply as the product of leaders’ ignorance: choices that are economically unsustainable may still serve the interests of politically important groups, while reform can threaten a government’s survival.

Political Constraints and Economic Policy

Busia had opposed Kwame Nkrumah and led a democratic government, but he faced many of the same political constraints as his predecessor. His government continued expansionary policies that could not be sustained, maintained price controls through marketing boards, and kept the exchange rate overvalued. The book argues that these measures were adopted not because Busia believed they were sound economics, but because they helped transfer resources to politically powerful constituencies, including urban groups whose support the government needed.

Price controls on agricultural goods helped provide cheap food to urban constituencies and generated revenue for government spending. That political usefulness came at a cost: the controls were unsustainable, and Ghana experienced repeated balance-of-payments crises and shortages of foreign exchange. Busia’s predicament thus joined an immediate economic problem to a political one: policies that helped maintain support could deepen the crisis, while changing them risked alienating groups that mattered to the government.

Devaluation and Overthrow

On December 27, 1971, Busia signed an agreement with the International Monetary Fund that included a massive devaluation of Ghana’s currency. The International Monetary Fund, the World Bank, and the wider international community pressed him to carry out the agreement’s reforms. Yet, in the book’s interpretation, Busia understood that devaluation carried a serious political risk, even as outside institutions urged its adoption.

The immediate aftermath was unrest and discontent in Accra. The protests grew uncontrollably, and the military overthrew Busia. Lieutenant Colonel Acheampong led the coup and immediately reversed the devaluation. The episode ended not in an orderly transition to economic recovery, but in the removal of the prime minister and the reversal of the policy at the center of the crisis.

Significance in the Book’s Argument

Busia’s experience serves as a case against the ignorance hypothesis—the idea that poverty persists because leaders and policymakers do not know which economic policies work. The book’s contrast is between economic advice and political incentives: external institutions could recommend reform, and Busia could recognize its implications, yet adopting it threatened political support. The obstacle, in this account, lay less in a lack of policy knowledge than in the constraints and incentives created by Ghana’s political and economic institutions.

That distinction also explains why the episode is not presented as a simple story of a well-intentioned reformer defeated by bad advice or a sudden policy mistake. Busia’s economic choices had political purposes, and the reform agreement had political consequences. His overthrow demonstrates how a policy intended to address economic crisis could destabilize the government that implemented it, while the military’s immediate reversal showed that the change was contested rather than secured.