In developing countries, most trade in household necessities takes place in what economists call the informal sector. Here all transactions are done in cash, few if any records are kept, taxes are not collected, and most government regulations are ignored. Governments strive to control the economy by collecting all hard currency earnings from exports and issuing licenses to limit imports. In Ghana in the 1970s, revenues fell well below the level needed to finance essential imports and service external debt. The issue of few import licenses by the military government became the source of much corruption. In local markets, imported goods continually circulated at ever-increasing prices as more and more people tried to share in the spoils of trade. The inflation rate rose to more than 100 percent. The economic chaos that followed was called ‘kalabule’. It was a bad time for the community at large, but many informal industrialists had never had such a good time, before or since.

The origin of the term ‘kalabule’ is uncertain, but it could be an Akan corruption of the Hausa term ‘kere kabure’, ‘keep it quiet’. In this era, a variety of goods were designated essential products; most of these were imported and included canned fish, evaporated milk, toilet soap, rice, sugar, and toilet paper. All basic goods were in short supply, and the government attempted to introduce rationing by selling controlled quantities at “controlled prices” to each member of the public at designated commercial stores. However, when one came to hand, the temptation to resell at a higher price was hard to resist. The Daily Graphic newspaper reported the story of a man charged in court with selling spoiled cans of sardines. He said in his defense that the fish was meant for trading, not eating!

The slogan ‘No brother in the army’ began to appear on taxis and trucks when people saw that all the soldiers’ families seemed to be prospering. Army officers’ girlfriends were seen driving brand new Volkswagen Golf cars, which were soon widely known as ‘honey bottoms’. All respect for the military government evaporated and individuals felt compelled to live by any means available.

Under General IK Acheampong’s regime, Ghana’s economy continued to decline. The exchange rate of the Ghanaian cedi had become totally unreal. Goods imported with an import license at the official exchange rate of 1.15 Ghanaian cedis to the US dollar could be sold at an exchange rate equivalent to around 20 cedis to the US dollar. This was the scale of profits made by anyone lucky enough to obtain an import license or to buy imported goods at “controlled prices.” The demand for import licenses far exceeded the supply. The soldiers gave them to their relatives and girlfriends, and to the merchants who paid the highest leftovers.

At Suame Magazine in Kumasi, Ghana’s largest informal industrial zone, some artisans made big money by establishing a virtual monopoly on the sale of imported auto parts and engineering materials. Department stores and car dealerships, owned by British and European companies, were occasionally issued import licenses to import these products. Forced to observe the law, they sold at “controlled prices” every time they received a shipment of goods from abroad. The artisans of Suame, through their contacts who worked in these companies, received early notice of the shipments and organized through various means the purchase of complete shipments. When people learned that parts and materials were only available at the Magazine, all repair work was diverted there. Artisans not only made huge profits from reselling parts and materials, but also benefited from the increased demand for repairs.

Between 1970 and 1979 the population of Revista Suame multiplied by more than five: from five thousand to about twenty-seven thousand. There is no doubt that a large part of this expansion was financed by kalabule profits. Informal industries were able to invest in new workshops, plants, and equipment, and many more opportunities were created for apprentices to learn a trade and for skilled men to gain employment. So not all consequences of the kalabule era were bad!

African Engineers: The Kalabule Era

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