Dr. Kwame Osei in a recent article stated that the Ghana economy is in a mess due to various factors. One of these is the massive decline of the Ghana cedi that at time of writing this has reached 1.92 against the US Dollar.
In a previous article Food Security Ghana (FSG) also highlighted the devastating effect that the declining cedi has on the livelihood of millions of Ghanaians with food prices spiraling out of control.
According to Dr. Osei the following factors are the main contributors to the mess that Ghana is in:
The Government of Ghana (GoG) is being dictated to by primarily the International Monetory Fund (IMF) / World Bank with regards to economic, monetary and fiscal policies. Accoerding to him this is due to the fact that up to 50% of the Ghana budget is funded from loans and financial assistance from the likes of the IMF / World Bank and other donors like China and the US.
There is mass unemployment, around two million, especially youth unemployment with Accra, Kumasi and the Northern Areas of Ghana acutely affected.
Due to the high costs of doing business as a result of inter alia high interest rates business is not being competitive, hence the lack of real job opportunities.
Ghana’s manufacturing and agricultural base which are two key facets of any economy are weak especially in the agricultural sector as Ghana is not producing enough food to feed her people hence the colossal imports especially of rice and poultry.
The Ghana cedi is vulnerable to internal and external shocks because of bad monetary policy decisions.
Ghana’s balance of trade deficit is in the billions of US Dollars because of its over reliance on imported goods.
Dr. Osei lay the blame for this sorry state of affairs at the feet of the Bretton Wood institutions that insisted that Ghana adopt benign but dangerous economic policies such as the Structural Adjustment Programme (SAP) and the Economic Recovery Programme (ERP).
In short, he says, these two policies decimated Ghana’s manufacturing base by selling off very cheaply to foreigners who now take their profits from these factories outside of Ghana and/or closing down the vast majority of the 400 state owned industries set up by Osagyefo Dr. Kwame Nkrumah.
In addition Dr. Osei claims that Ghana’s once thriving agricultural sector declined as the IMF/World Bank ‘persuaded’ government to stop food production and import food instead.
On the decline of the Ghana cedi Dr. Osei points out that, for instance, in 1990 GHC10 could buy a sackful of items from Makola market, in 2000 the same GHC10 could buy you perhaps half of the amount in 1990. Today GHC10 can get you very little from Makola market showing the reality that the value of the cedi has declined sharply over a twenty year period when one does a qualitative and quantitative analysis.
From a food security perspective there is little doubt that many thousands of Ghanaians are on almost a daily basis being pushed further into a state of depression with little hope of an improvement.
While a lot of propaganda is used to ensure Ghanaians that Ghana will become self-sufficient in industries such as poultry where import dependency is close to 70%, logic and reality dictates that this turnaround will require massive investments and time.
Many analysts also question the fact that such self-sufficiency will necessarily result in cheaper food prices.
Statements, for example, by the Minister of Food and Agriculture that he will halve rice imports by October 2012 or be prepared to be “fired” is seen as irresponsible propaganda and in a year of general elections propaganda that may very well backfire on the government of the day.
FSG has for long supported the drive to greater independence from food imports while suggesting a transition strategy and policy with regards to the cost of imported food to support the struggling masses in Ghana.
In 2008 the import duties of 20% at the height of the 2007-08 food crisis were dropped to help consumers. The duty was reintroduced 2009. We are currently in a similar if not worse crisis but the GoG has doggedly refused to review the policy again as part of a transition strategy towards self-sufficiency.
The debate about protectionism obviously have two sides to it. FSG have, however, consistently maintained that high import duties on foodstuff where Ghana is currently dependent on imports will not save or protect those industries, but will rather punish consumers. There are many other actions required such as massive investments in agriculture and agricultural research to move ailing industries towards self-sufficiency.
As time marches on towards November 2012 and as the plight of Ghanaians increases by the day it can be expected that policies, propaganda and promises with regards to food security in Ghana will come under the spotlight more and more.