Professor Henry Srebrnik

Professor Henry Srebrnik

Thursday, May 25, 2023

Ghana Has Fallen on Economic Hard Times

 By Henry Srebrnik, [Saint John, N.B.] Telegraph-Journal

Ghana was the first sub-Saharan African country to gain its independence after the Second World War. The former British colony known as the Gold Coast served as a source of inspiration elsewhere on the continent, and its first leader, Kwame Nkrumah, dreamt of a larger pan-African state.

The movement sought unity among people of African descent and also improvement in the lives of workers who, it was alleged, had been exploited by capitalist enterprises in Africa. There were even some African Americans who moved to Ghana, the most notable being the left-wing academic and activist W.E.B. Du Bois.

But like so many other countries in west Africa, Ghana fell prey to military rule after the increasingly despotic Nkrumah, who had banned all opposition parties by 1964, was overthrown two years later. It did not re-emerge as an electoral democracy until the 1990s.

Since then, it has taken major strides towards democracy under a multi-party system, with its independent judiciary winning public trust. Ghana consistently ranks in the top three African countries for freedom of speech and press.

There have been eight presidential elections, and five presidents, since 1992, including the current incumbent, Nana Akufo-Addo.

While the political system remains relatively healthy, at least as compared to neighbouring states, the country is facing one of its worst economic crises in decades. The size of Ghana’s debt is now almost 90 per cent of the total annual value of its economy.

Ghana’s annual inflation rate stood at 41.2 per cent in April, after reaching a two-decade high of 54.1 per cent last December. Soaring inflation is compounding the sufferings of many Ghanaians who now must dig deeper into their pockets to afford essential goods. About a quarter of the population lives below the poverty line.

Prices of many items have more than doubled compared to last year. They are constantly changing, partly due to the unstable nature of the local currency, the cedi, which keeps losing value against major currencies. It plummeted more than 50 per cent against the U.S. dollar in 2022, while the central bank hiked its main lending rate to 27 per cent.

Professor John Gatsi, Dean of the School of Business at the University of Cape Coast, explained that the nation is “in a high inflation regime right now and this affects food items and imported items all together.” According to Gatsi, Ghana’s over-dependency on imported goods also increases prices.

The Ghanaian economist also blamed the current high inflation figures on poor economic decisions by managers of Ghana’s economy. Excessive lending to the central government by the Bank of Ghana to finance government activities was a key reason for the crisis.

Ghana’s debt levels have been unsustainable for years, and the government had to renegotiate its debts with local creditors in a debt exchange program. It has just signed a new bailout program with the International Monetary Fund (IMF) worth three billion dollars over three years to help ease the problem, but how much difference will that make?

It also hasn’t helped that President Akufo-Addo is behind a grandiose undertaking projected to cost some $350 million – a building to be known as the National Cathedral of Ghana, an interdenominational Christian church scheduled to be built in Accra, the nation’s capital, as part of Ghana’s 60th anniversary celebrations.

In a speech at the turn of the new year, just two weeks after Ghana effectively defaulted on repaying most of its external debt amid the mounting cost-of-living and economic crisis, the president, scoffing at critics, renewed his commitment to the religious structure.

“The National Cathedral is an act of thanksgiving to the Almighty for his blessings, favour, grace and mercies on our nation,” he insisted at the construction site. God, he declared, had spared Ghana from conflict that had afflicted many countries, including some of its West African neighbours, who have been dealing with numerous security challenges.

According to the plan, the main building will have 5,000 permanent seats with room for thousands more, a music school, an art gallery, shops, and national crypt for state burials. It is envisioned to be a sacred space for all Christians, who make up 70 per cent of the population.

Though most of the costs are supposed to be covered by donations, with the state providing the land and some seed funding, critics have queried the amount of money -- some $58 million -- that the government has so far spent on the project.

Akufo-Addo first revealed plans for the cathedral after he won the 2016 election but work on what the president has referred to as “his gratitude to God” only began in 2022, two years after his re-election.

Ghanaian economist Theophilus Acheampong, a political risk analysis, believes the government’s priorities are misplaced, considering the country’s current economic situation. And members of parliament refused in December to approve a further budget allocation of $6.3 million from the government. Construction has now stalled due to lack of funds.

Despite the opposition, Paul Opoku-Mensah, the presidential appointee leading the National Cathedral project, remains confident in its viability and sees it as a way to boost the economy. “We have a strategy of bringing visitors to Ghana. We have to use our religiosity for our own development,” he said.


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