In developing countries, most trade in household necessities takes place in what economists call the informal sector. Here all transactions are made 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 the external debt. The issuance of few import licenses by the military government became the source of much corruption. In local markets, imported goods continually circulated at ever higher prices as more and more people tried to share in the spoils of trade. The inflation rate rose to more than 100 percent. The ensuing economic chaos was dubbed ‘kalabule’. It was a bad time for the community at large, but many informal industrialists had never had it so good, 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 in 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 accused in court of selling tins of sardines that had gone bad. He said in his defense that the fish was meant to be traded, not eaten!
The slogan ‘No brother in the army’ began to appear on taxis and trotros when people saw that all the families of the soldiers seemed to be prospering. Army officers’ girlfriends were seen driving brand new Volkswagen Golf cars, which soon became widely known as ‘honey bottoms’. All respect for the military government evaporated and individuals felt compelled to live by any means available.
Under the regime of General IK Acheampong, Ghana’s economy continued to decline. The exchange rate for the Ghanaian cedi had become totally unrealistic. Goods imported with an import license at the official exchange rate of 1.15 Ghanaian cedis per US dollar could be sold at an exchange rate equivalent to about 20 cedis per US dollar. This was the scale of profit made by anyone lucky enough to obtain an import license or purchase imported goods at “controlled prices.” The demand for import licenses far exceeded the supply. Soldiers gave them to their relatives and girlfriends, and to merchants who paid the highest scraps.
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 vehicle parts and engineering materials. Department stores and car dealerships, owned by British and European companies, occasionally received 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 Suame artisans, through their contacts who worked in these companies, received early notice of the shipments and organized the purchase of complete shipments through various means. When people learned that parts and materials were only available from the Magazine, all the repair work was diverted there. Craftsmen not only made huge profits from the resale of 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’s profits. Informal industries were able to invest in new workshops, plant and equipment, and many more opportunities were created for apprentices to learn a trade and for skilled men to obtain employment. So not all the consequences of the kalabule era were bad!
