Ghana was the foremost country to gain independence from British imperial rule in the South of the Sahara. The forbearers envision a nation where the people(blacks) would become masters of their own destinies and take socio-political and economic decisions that would eventually liberate them from the angst of colonialism and its appendages. They foresaw the global economy in decades to come and took drastic measures to ensure that newly independent Ghana would someday become self-reliant in the goods it consumes and exports to its neighboring countries.
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Post-independence Ghana saw the rise of new manufacturing industries essential for any country to survive global economic turmoil and at least wean itself from the IMF and the World Bank. In the early 1960s, Ghana’s gross domestic product was higher than that of the Asian Tigers. Today, the same cannot be said since Ghana has been deindustrializing while the Asian Tigers have become if not the hub, but a key player in industrialization.
Fast forward, Ghana's economic aspirations became a mirage when its first president was ousted through a Military coup that was backed by the West. Successive leaders then paved way for transnational companies to take over most of the natural resources in Ghana. Austerity policies such as structural adjustment, economic recovery, and others were adopted and implemented notably in the mid to late 80s. These policies paved the way for the devaluation of the local currency, divestiture of State Parastatal, and the opening of borders for foreign goods. These policies marked the beginning of the weakening of the Ghanaian currency. This week, Bloomberg reports that the Ghana Cedis is the worst-performing currency in the world. The Sri Lanka rupee is even doing better than the Ghana Cedis. How can a country endowed with rich mineral resources be counted among the beggars, going about begging and seeking validation from IMF and other rating agencies?
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The majority of countries globally are sailing against strong headings, particularly in this post-covid downturn. Thus, the economic crisis in Ghana cannot be said to be isolation yet, certain domestic decisions taken by the managers of the economy post-Nkrumah era can be said to be the architect of the current economic crisis in Ghana.
For decades now, Ghana’s economic strides have been driven by Eurobonds and stellar domestic borrowing. The crude oil industries really added to the growth of its economy but like many other African Nations where oil wealth has become a slash fund for politicians, the contribution of the oil sector to the growth of industries and agriculture is if not stagnant, then very insignificant. Natural resource in Ghana has contributed less to the economy yet, politicians are fixated on its wealth due to the incentive for corruption.
Economists notably from the Ivy League institutions have managed Ghana’s economy with borrowed Western principles that do not apply to the real situation in Ghana. Today, businesses are collapsing, thousands losing their jobs, and an all-time inflation that has never been experienced in Ghana due to the kind of neo-liberal principles that is used to manage the economy where dollars are injected into the system from time to time to save the sinking Cedis. The Cedis is at an all-time low against all major global trading currencies.
For the long-term stability of the cedis, Financial policymakers and politicians alike need to put their heads together to make sure that real policies are crafted to make Ghana self-reliant in the goods it consumes. The current situation of injecting more dollars into the market to stabilize the cedis should not continue for long. Efforts should be made to transform the enclave mineral sectors for it to have more linkages to others sectors like industry and agriculture. Without local production, no amount of economic wizardry would stop the cedis from constant depreciation.