Some Thoughts on Ghana’s COVID-19 Political and Economic Situation

1. Personally, I’d have preferred another week’s extension of the lockdown measures to get more data points on the trend of the tests and confirmed cases (assuming the 14-day incubation period which the scientists have told us remains the case – that is, two cycles of two weeks). This would’ve helped with the analysis of the impact of the lockdown, given the two weeks incubation period of the virus. However, I suppose the broader empirical question is whether another 7 days would have made any difference. Perhaps, the folks in government know something else that we don’t and so we should give them the benefit of doubt. Damned if you act, damned if you don’t. The jury is out on the science.

2. A simple suggestion: The government should now freely and aggressively distribute masks to citizens and enforce the wearing of them. This could be done at vantage points in the city and on the key transportation entry and exit routes (e.g. Kasoa-Mallam-Kaneshie-CBD; Ofankor-Achimota-Circle-CDB route, among others). Also, strictly enforce basic hygiene through community health campaigns and social distancing practices. Recent data from the Ghana Statistical Service indicates that most of Ghana’s population over 60 years (could suffer the most from COVID-19) live in Accra, Central and Kumasi. Also, most smokers are in Accra and the Central Region while most households with no water and soap for handwashing are also in Accra and Central Region.

3. I sincerely hope the announced measures work because the economy is taking a considerable hit. The statistics bear this out. For example, Ghana’s Purchasing Managers’ Index (PMI) compiled by IHS Markit Economics, which measures the direction of economic trends, show declines in output in the manufacturing & services sectors, new orders & employment far worse. Ghana’s March PMI reading fell to 41.4 in March from 52.6 in Feb. This is lowest in over 6 years, representing a substantial deterioration in business conditions due to COVID-19.

4. I have personally not been particularly enthused by aspects of government’s policy implementation, but they’ve done well and shown leadership on this COVID-19 issue. The key thing now is making sure the policy coordination (both monetary and fiscal policy) is tight and a bit more well thought through to minimise collateral damage – for example, the proposal to use Heritage Fund and amend Bank of Ghana Act to remove zero net domestic financing requirement, in my humble opinion, is walking down a slippery slope.

5. The current administration can scale back on some of the expenditure items in the 2020 budget and still be in the running to win the December 2020 elections. Why? I don’t see any coherent messaging or serious policy announcements from Ghana’s opposition parties, yet. Also, I would argue that the economic pain and hardship of the past few years, epitomised by the ‘dumsor crisis’ is still relatively fresh in most people’s minds. It’s a tall ask for the opposition but as they say, one day is a lot of time in the political arena. Again, the jury is still out on this one!

6. On corruption, the latter seems to have become woven in the political economy and nature of political settlement in Ghana’s Fourth Republic. I honestly don’t know how this could be aggressively solved; recent digitalisation initiatives offer a glimmer of hope but more needs to be done.

7. The recent USD1 billion of funds from the IMF under their Rapid Credit Facility is a vote of confidence in the management of the economy. The fiscal discipline of the past few years is paying off. However, if all it takes is one external (exogenous shock) event to throw our much-touted macroeconomic credentials out of gear, then we’re really in some serious waters. The key thing is maintaining the momentum and fiscal discipline in the run-up to the elections and its aftermath.

8. We, as a country, need to chart a new path of sustainably financing our own development, premised on the cardinal principles of LOCAL SUFFICIENCY, EFFICIENCY, TRANSPARENCY AND OVERALL VALUE FOR MONEY. This virus has shown that the economy does not work for most citizens; there is still the macro-micro chasm that needs to resolving – some seeds sown in the past years from ‘Operation Feed Yourself’ to ‘1D1F’; however, we’ve talked for far too long on industrialisation and not the actual ‘DO’!. This needs to change.

9 This pandemic represents an immense opportunity for Ghana to chart a new path of nationhood and real trickle-down economic prosperity. Time to REBOOT and REBUILD a more inclusive society, where every citizen enjoys from the economic spin-offs, not just some select few politicos and their cronies.

Have a blessed week. Stay safe and healthy!

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