The Post-Covid Era – Ghana: Challenges and Future footprints

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Gross Domestic Product (GDP)
Gross Domestic Product (GDP)

Ghana, like other African countries was hit by the coronavirus pandemic. By estimate, Ghana was hit by approximately 5% of gross domestic product (GDP) in 2020, the year the pandemic was bookmarked to have peaked.

Beyond this headline estimate, several detailed impacts have already become clearer. To curtail the pandemic, governments implemented a variety of mitigation strategies that were pivotal in preventing the spread of the virus across the country. These measures brought a temporary halt to much of the country’s social and economic life, making the pandemic likely to have an impact into the foreseeable future (post-Covid).

With each of the 16 regions, with different human characteristics and demographics facing its covid cases, it is possible to identify several common Covid-related impacts:

First, the pandemic has accelerated the growth rate of prices of food products and services. In 2020, few days before lockdown, Ghana witnessed an incidence of panic buying and stocking up. Prices of some food products and services increased by two thirds. And some of these products and services since then have not seen a drop in prices even after the event period. A case is seen in the hike of transport prices when vehicles could not hold a full capacity hence passengers had to pay extra to cater for empty seats. This transport fares were not dropped even when full capacity was resumed in certain part of the region especially Accra. These social effects were more difficult to track using headline data, but these has become clearer in terms of the current inflation trend.

Secondly the pandemic has caused an increase in inequalities between societal groups, impacting their lives in areas such as mental health, personal safety, income, and education. According to results from a COVID-19 Business Tracker Survey conducted by the Ghana Statistical Service (GSS), in collaboration with the United Nations Development Programme (UNDP), and the World Bank Ghana, Ghana saw the wages of about 770,000 (i.e., 25.7%) of its total workforce being reduced and about 42,000 employees were laid off during the country’s COVID-19 partial lockdown. The pandemic also led to reduction in working hours for close to 700,000 workers. For education, children were forced to stay away from school, where the country witnessed well-resourced private schools hosting classes, tutorials, or lectures online at the expense of rural or resource-handicapped folks who had no option but to stay home till the pandemic is curtailed to an extent. These factors alone currently have accelerated trends spurring inequality.

To add to the above, government revenues fell by 50% during covid. Also, forecasted rate of revenue growth is currently lagging since the country is still recovering post covid. Not only was Ghana hit by shortfall in Oil revenue, but exports and imports revenue shortfalls had a role to play in revenue lag. Ghana also experienced a drop in tax revenue projections/expectations due to lay-offs and reduced wages. Businesses especially the tourism sector are yet to recover, re-employ and reset themselves up post-covid which is likely to take about 3 years. These revenue lags are some of the causing agents to an increasing government debt from GHS 40.1 billion to GHS 391 billion as at first quarter of 2022; because revenue shortfall means borrowing more to finance government expenditure.

Rapid digitalization has been a positive characteristic of the pandemic.  Although Covid-19 had led to a rapid rise in teleworking and increased digital usage, especially in urban areas with an educated workforce, it has brought into focus the increasing digital divide that exists both within urban and between rural and urban regions in Ghana. This concern highlights the need for urgent actions to close the gap.

Although government has implemented several initiatives to address the challenging impacts of covid in the post-covid era, there is still more to be done.

A July 2020 OECD (Organization for Economic Co-operation and Development) report on policy responses to Covid-19 sets out several pathways which can be adopted by the Ghana government to address these challenges post-covid. 

The report points out that countries cannot face the challenge of recovery on their own, emphasizing that recovery is a shared duty across all levels of government. The importance of multilevel partnership approaches was highlighted by the Commission’s report, which considers that regional recovery from the pandemic is dependent on place-based, multilevel, and partnership-led approaches, supported by effective policies and instruments. 

Also, it spells out the need to focus on addressing the structural inequalities magnified by the pandemic. the OECD argues that economic recovery should be paired with a focus on environmental sustainability and consider the pivotal role of digitalization. 

Outside the scope of this report, Ghana’s economic policy responses are still timid. There should be fiscal and monetary easing. Ghana has little capacity for stimulus and relief packages, considering the job losses and collapse of businesses. Over time citizens may want to see government interventions to support the unemployed, firms, workers, and the poor.

This analysis is evolving and has been informed and inspired by conversations with colleagues and references to existing data. It should be emphasized that many impacts are anecdotal and based on partial data. Official and more comprehensive data will become available over time. 

Edem Korbla Agbavor

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