Fighting COVID19 in Ghana: What will financing in Ghana's post pandemic economy be like?

On Monday, the 20th of April 2020, Ghana lifted its lockdown with about 1042 total cases on its sleeves to allow citizens to continue their businesses and earn a livelihood. The President of Ghana emphasized the vulnerable and the poor, but unfortunately, there is no known economy worldwide that depends on the poor and vulnerable for the development or growth of its economy; all known theories emphasize on the middle class. The irony in the whole matter is that whereas other nations are fighting to preserve the lives of their own based on the reality that lives lost cannot be recovered; Ghana is fighting to maintain its economic life-line though this can be recovered later.

During the week of the lifting of the COVID-19 lockdown in Ghana, the Bank of Ghana announced that all banks and non-bank financial institutions should suspend the payment of dividends to shareholders, even though dividend payments from the same institutions for the period 2018 suffered the same feat.

Currently, financial institutions are not in any mood to grant loans to businesses, and despite the government’s budget to give 600 million Ghana cedis to the small and medium enterprises, the rate of unemployment and economic decline is likely to plunge further. This is because of the greater proportion of the money going to traders based on membership in a trade association. Technically, this enhances the activities of cartels, and the perpetuating of price-fixing which on the blind-side gives foreign businesses an advantage in business over the local counter-parts.

In a country where social services are very well delivered, COVID-19 economic support should move away from salary increments, buying of new vehicles, payment of 50% of electricity bills, and so on to the more distributive economic hardship softening measures such as but not limited to:

  • Removal of taxes (including Value Added Tax) on electricity, water, and fuel;
  • Removal of Value Added Tax on all food items;
  • Free distribution of nose masks to all persons living Ghana within a system of identifying receivers to guarantee fair and equitable distribution; and
  • Free distribution of necessary food items(rice, oil, beans) to households and a monthly supply of soluble-tablet disinfectant with portable hand-spray.

There are quite a several suspicions around the lifting of COVID-19 lockdown in Ghana. First is the political season: presidential and parliamentary elections are due later this year, and the Electoral Commission of Ghana is bent on creating a new Voters’ Register beyond all reason. Secondly, it appears figures coming out regarding the state of the COVID-19 in Ghana are not truthful enough with figures older than 5 days coming out as current. The reasons withholding data are yet to be known. All these points to a Ghana that may soon experience another round of COVID-19 lockdown.

Traditionally, a lockdown in Ghana will be difficult unless there is the intervention of the military. A successful lockdown will have to include a total ban on fuel stations from selling fuel to vehicles irrespective of owners’ status except to medical staff and persons selling essential items. Also, all vehicular movements must be banned except for selected state-owned public transport services.

It must be very clear that lockdowns may not be difficult to manage in Africa, but many governments in Africa are driven by the short-term political and economic gains, and therefore, are not likely to hold the bull by the horn.

Post-1979 and the years 1982 and 1983 were very difficult times for Ghana, and yet people survived; compared to the current situation of a lockdown, other than using the vulnerable as an excuse, there should be a more convincing reason why Ghana should have any difficulty in maintaining a “stay-at-home” policy during the COVID-19 pandemic.

Except for businesses that intend to diversify to other types of businesses, to some extent, do not need any additional or new capital introduction. After all, if all businesses close for 2 weeks and resume operations it is good as all businesses not working on Saturday and Sunday, and resuming work on Monday – nothing is lost during the shut-down. Only businesses that continue to run facilities but do not earn any income during the period may be eligible to speak about additional capital, but in principle, businesses must produce revenue, and if a revenue cannot be generated, then the facility must be shut down to avoid losses.

The majority of small business loans taken in Ghana normally include an allowance for non-business expenditures such as the payment of housing rent, children’s school fees, medical expenditure, and at times funeral expenses. Financial institutions, on the other hand, have become very much unfriendly in granting loans; and the emphasis is on bigger businesses making profits and with a plan to increase profits and also capable of providing adequate collateral.

Price hikes and inflation will remain key economic issues in Ghana unless law-makers and the judiciary use the law to dis-allow cartels and price-fixing.

Business problems and the poverty situation are primarily the results of Bank of Ghana and other government policies especially relating to money laundering which rather enrich a select few from the mainstream banks and some government officials.


About Writer

Xenia Atidigah is a Digital marketer and Social Media strategist. She has cut her teeth with Leading Digital marketing Companies in Africa and The Diaspora.

Xenia is currently studing commerce in India, she writes on trending business and finance issues.