This post is an excerpt from a bigger piece I wrote reflecting on COVID-19 and the tough choices Ghana will need to make in addressing the virus.
Such is why I started this blog. Read the full post here.
Ghana’s President, like South Africa’s, has, over the past couple of weeks received no shortage of praise. Praise from various corners of the globe for his decisiveness, ‘rampant’ testing and general handling of the pandemic.
As the COVID-19 pandemic spreads across the continent, African policymakers are being faced with difficult decisions. These include choices that will ensure their economic, social and political survival and stability. The expression stuck between a rock and a hard place seems fitting but doesn’t quite do it justice. It presumes there are two options. For Africa, there is only one option. Assuming African leaders want to deliver a high-growth future and a more effective state machinery, that choice is to reform.
Post Map
Lifting the Lockdown, but Constraints Remain
The recent past decision by the Ghanaian Presidency to lift the lockdown has caused a lot of debate and created divides between Ghanaians. There are some who think it is the absolute wrong move and others who think it’s a necessary evil. Regardless of which side of this chasm you stand, there’s agreement that rebuilding the Ghanaian economy to a different, more prosperous place than it was before COVID-19 would require some tough choices.
Prior to COVID-19, Ghana’s economic growth was forecast at 6.8% for 2020, on the back of 7.0% growth in 2019. Driven mainly by growth in the mining and petroleum sectors, the country was set to become the third fastest growing economy in Africa, behind Rwanda, Tanzania.
It is not all rosy of course. Even before the crisis, business confidence suffered as the Cedi lost 12.9% to the US Dollar in 2019. Under- and un-employment was effectively at 4.3% in 2018, and only 1 in 10 young Ghanaians are out of work . This figure of course is much larger should we properly account for the discrepancies in the formal definition of unemployment. A measure which fails to capture the complexity of Ghana’s labour force, 80% of whom work in the informal economy.
With COVID-19, Ghana will be worse off than it has been in the past 36 years.
The International Monetary Fund (IMF) forecasts that Ghana’s economic growth will decline to 1.5% during 2020 and rebound to 5.9% in 2021. This assumes that the government’s measures to manage the crisis, keep the economy going – albeit slowly. If not, the V-recovery predicted by the IMF might instead lead to deflated growth and a huge deficit to GDP from collapsed revenues and increased spending.
Tough choices await, a non-negotiable imperative for action
On the bright side, it should be noted that Africa has already, and thankfully, shown some resilience with more localized pandemics like Ebola and HIV AIDS. Ghana for one played a huge part in the response to both these crises. As such, coming up with solutions is not beyond us.
With this pandemic, the decision that must be taken now is one that will shape Ghana’s trajectory for decades to come.
Unfortunately, there is no decision that will come at zero cost, politically or economically. What is a given is that the pandemic demands an economic response in the magnitude of the disruption it has caused. Any less and Ghana will be shooting itself in the foot.
There are no simple, silver bullet solutions either.
Turning this crisis into an opportunity will involve a series of difficult political trade-offs and tough resource choices. Choices that prioritise much-needed economic policy reforms, and put jobs and growth before political dogma and vested interests.
For that to happen, seven themes should inform Ghana’s next development steps.
Noelle Wonders
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