Ghana’s economic start has yet to prove itself

Purchase of spices in the Accra market.  The Ghanaian economy has experienced significant growth in recent years before the Covid-19 shutdown.  January 25, 2017 (Photo by Ruth McDowall / AFP)

Walking around the eastern Legon neighborhood in Accra, the capital of Ghana, is like lifting a corner of the veil on the dreams of the emergence of this English-speaking country in West Africa. New buildings springing up like mushrooms, supermarkets are competing with street stalls, and sedans are almost more than the dentated yogurt-shaped kias. On Banana Street, the MOST incubator welcomes young entrepreneurs with promising profiles, such as Moses Mallaghan, host of a startup that wants to combine rurality and technology. “The agricultural sector is very important in Ghana. The mobile phone can help it to develop and enter into a formalized system that attracts investors and banks “, He explains with the complete art of “pitching” which consists of presenting his company in a few minutes.

Political alternation

Eastern Legon and its inhabitants are in their own way the uprising of the country of 30 million inhabitants. A democratic state where general elections were held Monday, December 7 in a relatively peaceful climate. The outgoing president, Nana Acufo-Addo, who is running for a second term against his predecessor and main opponent John Mahama, has a nice game to highlight his economic record. Since the power came in 2016, the growth reached rates of 6-8%. Until the outbreak of Cowid19, which brutally slowed the dynamics, and that many hope to be just a hitch in a well-established dynamics.

The Ghanaian trajectory is really something to make people envious. For almost three decades and the advent of a multiparty system, two political formations have shared power; An exception on the continent. And this “small” country sits on second place among West African economies, far behind the Nigerian giant but ahead of the Cote d’Ivoire. It is also one of the few states in sub-Saharan Africa classified in the category of countries with average human development. A state that has just overtaken South Africa as the continent’s leading gold producer, in addition to being the world’s second largest producer of cocoa and has for a decade exploited the oil fields discovered off the coast.

Read too Slavery: The Race of Four African Countries for Memorial Tourism

In 2019, Ghana even succeeded itself as the most attractive destination in West Africa for foreign direct investment, surpassing Nigeria, which is six times more populated. “This is a country that offers a lot of opportunities”, Confirmed Darlington Munhwani, president of insurer Allianz Ghana. Its activity until the arrival of the coronavirus also recorded double-digit growth. At Renewable Energies, where his company wants to develop insurance, he sees projects from everywhere, especially in Europe. “Ghana’s strength lies in both a wealth of resources and a peaceful political environment.”, Describes the Zimbabwean, and mentions in passing that “KIt is extremely rare in the area, and this is what helps attract investors. “

One plant per area

Improving the business environment has been a priority for the current government, which is working to purge macroeconomic indicators and the banking sector. Before his election, President Nana Acufo-Addo also made bold promises to promote agriculture and the industrialization of the country. These included the construction of small dams in all the villages of the arid regions of the north, and especially a plant in each of the more than 270 administrative districts of the country.

For the ambitious projects, the state of play is mixed. Only a handful of industrial projects have seen the light of day. “There are quite a few assembly units, in the automotive industry for example, but we do not transform overnight into manufacturing power.”, Sums up a French businessman living in Accra. “The team is very good at communication. When it comes to talking to Bloomberg, for example, they are the best. But the concrete translation is somewhat different., Says a European consultant. There are always power cuts, the roads are bad as soon as you leave Accra and the country imports most of what it consumes. “

Spectacular recovery

Some still remember that Nana Acufo-Addo took over the Rins in 2016 with a poor economy. Growth was at half-mast, the currency of ultra-volatile currency and inflation soaring. Many companies have shut down due to an extremely chaotic energy supply. “Things are so bad that we have to ask for help from the International Monetary Fund (Editor’s note in 2014), recalls John Asafu Adjaye, economist at the Ghanaian Tank African Center for Economic Transformation (ACET). The current government has been able to stabilize and rectify the situation. “

The global crisis caused by the Covid-19 epidemic risks questioning this progress. According to the IMF, this growth should not exceed 1%. Above all, the explosion accentuates one of the structural problems of the Ghanaian economy: debt increases. The economic support plan, provided to support businesses and households during the health crisis, suddenly widened the deficit to more than 11% of GDP. Debt is now over 70%. However, the government, unable to raise enough taxes in a country where 80% of employment is informal, is at the mercy of investors. In the markets, Ghana borrows at increasingly high rates.

Article reserved for our subscribers Read too Cocoa: “Kot Divar and Ghana on the offensive against the multinationals Hershey and Mars”

The budgetary equation makes the objective of real growth even more complicated. Because it remains too dependent on the price of raw materials exported on the world market. The economic boom of recent years has been accompanied by growing inequalities. It is enough to leave the heart of Accra to measure the requirements. Odododiodio is one of the poor neighborhood, forgotten by the elites. The “Ghana miracle” has not reached the concentration of rich houses and rattled alleys where the sick smell of open sewers floats. In a small courtyard, Nii Addo teaches several dozen street children from 5 to 16 years. Only the generosity of some locals and passing tourists allows it to keep up. He is delighted that President Acufo-Addo has released high school leave, a flagship measure of the last term, but for the rest, he said, “We are not too interested in politics because politicians are not very interested in us.”.

The situation is even more difficult far from the capital, in the north of the country, poor and desolate. Due to lack of perspective, families from northern Ghana migrated a lot to Accra and Kumasi, the second largest city. “Creating jobs for the populations, especially the youngest, must be the priority of the future government, Estimates economist John Asafu Adjaye. The country is peaceful today, but the situation bears the seeds of instability. “