Ghana’s worsening economic crisis has hit ‘an unprecedented situation’ says one trader

By Jonas Nyabor
Posted on Friday, 21 October 2022 18:11

View of shops closed by the traders in protest of Ghana's worsening economic conditions in Accra, Ghana October 19, 2022. REUTERS/Francis Kokoroko

The Akufo-Addo government must urgently bring stability to the Ghanaian economy as a cost of living crisis has imposed hardship across sectors, triggering widespread protests in Accra. How will the government respond?

Traders at Adum in the Ashanti Region  on Monday 17 October jeered at President Akufo-Addo’s convoy while on his way to inspect construction works at the Kumasi Central Market.

A week earlier they had closed their shops to protest the fast depreciation of the cedi, rising inflation and high lending rates.

This incident from a region that has stayed loyal to the New Patriotic Party (NPP) highlights the frustrations caused by Ghana’s cost of living crisis.

‘Unprecedented situation’

Across Accra’s commercial hubs – Tudu, Abossey Okai, Okaishie, Makola and Rawlings Park – traders declared a 5-day protest, locking up their shops while idling around.

The country’s largest traders’ bloc, Ghana Union of Traders Association, says the protest is to force the government to “find innovative ways to deal with the free fall of the cedi”.

I have been in this market for 10 years and in the space of three months I have seen price increment rates I have never seen before

“This is an unprecedented situation. I have been in this market for 10 years and in the space of three months I have seen price increment rates I have never seen before,” Ernest Kojo Asante, a confectioneries wholesaler at Okaishie in Accra, tells The Africa Report.

For him, keeping up with price changes from his suppliers has been a headache and he blames the downward spiral of the cedi against the US dollar.

Most of his products – biscuits, toffees, and chocolates are priced in dollars and are sourced from China, Turkey, Sri Lanka, US, and UK.

Worst performing currency in the world

The cedi is trading at GH¢15 to a dollar after depreciating by 9% within a week and 52% since the beginning of the year, according to Bloomberg, making it the worst performing currency in the world.

“A pack of soda cracker biscuits imported from China was GH¢14 on Monday and by Thursday has risen to GH¢18 all because our suppliers bought them in dollars. As a business owner, I have no option but to increase my prices accordingly,” Asante tells The Africa Report. 

At his shop, at least four customers had left without making a purchase because they could not afford the new prices.

“This is a daily phenomenon,” he says, pointing to the last customer as she leaves. “It has affected my sales and profit margins because customers come in and after telling them the price, they don’t buy.”

The cost of transporting products from the Tema port to the central business district has also added to the price hikes, and for Asante there is very little he can do about the situation.

“Nobody is in business to make losses so if we are going to come here to break even or lose, there is no need to open our shops. The government must urgently take action on the situation because things have taken a pretty bad turn,” he says.

Drivers also hit hard

Besides traders are the drivers, an important group in Ghana’s mobility-driven economy.

After a series of protests earlier this year, they have resolved to hike fares by an extra 40% to make up for the rising cost of fuel.

At the Peace Rawlings Park cooperative society station in Accra central, Joseph Jesse and his colleague drivers are engaged in a heated debate over the depreciation of the cedi.

The closure of shops in the central business district has affected their work for the day, but the situation isn’t significantly different on a regular day.

[…] our situation is dire because all our profits go into purchasing fuel. We basically work to lose.

He tells The Africa Report that passengers seem to be finding alternative means of commuting besides taxis because of the new fares.

“As drivers, our situation is dire because all our profits go into purchasing fuel. We basically work to lose. In January fuel was about GH¢6 [$0.46] per litre but now we are paying GH¢13 per litre.”

“We have increased our fares twice since the beginning of the year but the consistent fuel price hikes have erased our margins,” Jesse says.

He says the challenges of drivers aren’t limited to fuel prices. The depreciation of the cedi against the US dollar means that imported vehicle parts now cost a lot more.

“Even our used tires cost more. For instance a 185/60/14 tire was GH¢60 around February but now it is GH¢110. If you get two flat tires, you’ll be in trouble,” he says.

A regular combustion engine oil, which was sold at GH¢80 per gallon (4 litres) earlier this year, is now GH¢140.

“We are just wasting our efforts because we make nothing,” Jesse says, hoping that fuel prices will drop to at least GH¢9 to make their jobs worthwhile.

Bleak situation for agriculture

In the agricultural sector, the situation looks bleak, according to Edward Kareweh who farms rice, sorghum, and maize.

Kareweh, who is also the secretary of the Ghana Agricultural Workers Union, says there’s an imminent food shortage in the country due to the prevailing circumstance.

“Farmers are now forced to reduce the acreage cultivated because it has become difficult. Agriculture is now a dreaded area and unfortunately this means yield per farm will be low this year,” he tells The Africa Report.

The downward spiral of the cedi against the dollar has led to a further increase in fertiliser prices caused by the Russia-Ukraine war.

According to Kareweh, some farmers are switching from growing maize – a staple food in Ghana – to sorghum because the latter requires less fertiliser.

The government must seriously intervene in the agricultural sector.

The result of this is a shortage of maize and consequently maize-based products like Kenkey which is now being sold at GH¢3 per ball from GH¢2 earlier this year.

Post-harvest losses may increase as well because it is now more expensive to cart perishable products from farm gates into the markets.

“The government must seriously intervene in the agricultural sector. We need so much support because the current situation is really bad,” he says.

IMF deal?

President Akufo-Addo is looking to the IMF to secure a $3bn bailout before December to keep the economy on track but pressures on him to deliver has been enormous.

The IMF’s last mission to Ghana concluded initial talks with authorities last and said “the discussions will continue in the weeks ahead, with a follow-up mission to take place expeditiously”.

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