In 2019, Ghana had the world’s fastest-growing economy after a period of promising economic growth. However, that is not the case today.
The once economic powerhouse of West Africa is struggling with the worst financial crisis in decades. Inflation is at a record 50.3 percent, the highest the country has experienced in 21 years.
When Nana Akufo-Addo took power in January 2017, there was instant change in the state of the economy, inflation fell significantly.
The country’s budget deficit, which was approximately 6.5 per cent of the gross domestic product before Akufo-Addo’s government came to power, fell to less than 5 per cent of GDP by the end of 2019.
Daniel Anim Amarteye, an economist with Policy Initiative for Economic Development says: “The growth that we experienced around 2017 to 2019 was actually coming from the oil sector.”
“We were so excited that the economy was growing, but we couldn’t devise strategies to ensure that the growth reflects in the other sectors of the economy,” he argues. “For instance, we neglected the agriculture sector, and we couldn’t do any meaningful value-added investment in that sector. The government became complacent.”
Agriculture, which provides at least 90 percent of the country’s food, represents 21 per cent of Ghana’s GDP and accounts for more than 40 percent of its export earnings, according to the United Nations’ Food and Agriculture Organization.
Amarteye observes: “Over the years, the government failed to invest in increasing output in the agricultural sector that will eventually lead to economic growth and transformation and food security. We are a major cocoa growing country, but we didn’t pay attention to increasing yields to translate into more foreign exchange earnings to drive economic growth and employment.”
Francis Anim, a businessman who spoke with Al Jazeera says: “Things are not the same anymore…I used to spend $5 a day with my wife and child on food alone early this year. Now we spend close to $10 [for the same amount of food]. Why?”
Anim, who is a vehicle spare parts importer, notes that: “The import duties are very high at the ports, so we have to pass on that burden to retailers, and eventually the consumer suffers. This has resulted in a high cost of living in Ghana, and the economy is not helping us either.”
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President Nana Akufo-Addo has attributed the economic crisis to the Russia-Ukraine war, something analysts have disabused; saying some of the political and economic policies implemented by the government exposed the weaknesses in the system even without those external factors.
A study conducted by Transparency International in 2021 on perceptions of corruption in Africa ranked Ghana ninth out of 49 Sub-Saharan African countries.
Last month, Ghana reportedly reached an agreement with the IMF for a $3bn loan. However, it will need to carry out a conditional comprehensive debt restructuring in order to receive the funds.
“This means that Ghana will have to renegotiate the terms of its debt with its creditors, including extending repayment period, lowering the interest rate, or reducing the overall balance owed,” per Al Jazeera.
