Re: Ghana’s GDP Grows at Fastest Pace in Five Years, Beats Estimates Original By Ekow Dontoh & Moses Mozart Dzawu
The headline from Bloomberg by Ekow Dontoh and Moses Mozart Dzawu, “Ghana’s GDP Grows at Fastest Pace in Five Years, Beats Estimates,” certainly grabs attention, but it raises concerns about its reflection of reality in Ghana.
According to the report, Ghana’s economy expanded by 6.9% in Q2 2024, exceeding economists’ expectations of 3.3%, with growth driven by the industrial, agriculture, and services sectors. While this may seem like positive news, the headline can be misleading when considering the lived realities of many Ghanaians.
Gross Domestic Product (GDP) is a blunt measure, and in the context of the 21st century and the Fourth Industrial Revolution, it fails to capture critical aspects like income distribution, inequality, and the actual impact of growth on ordinary citizens.
Despite this so-called economic expansion, many Ghanaians continue to grapple with high levels of poverty, unemployment, and economic hardship, particularly in rural areas. The multiplier effect, which should see economic growth leading to widespread benefits for the population, remains absent.
These reporters and Bloomberg must know that the economic challenges facing the country are compounded by widespread corruption and mismanagement under the Akufo-Addo and Bawumia administrations. While such GDP figures may paint a rosy picture, they ignore the deeper structural issues affecting the broader population.
It is important for Bloomberg and these reporters to contextualize their economic analysis with the social and political realities on the ground, avoiding any impression of what’s locally known in Ghanaian journalism as “Jandam”, a term implying a skewed or biased report. Let us consider these issues currently in Ghana:
- High Inflation and Cost of Living: Ghana has been grappling with high inflation and rising cost of living, which are straining the finances of ordinary citizens. Essentials such as food, fuel, and utilities have become more expensive, exacerbating public frustration. By August 2024, inflation was reported at 33.2%, largely driven by the depreciation of the cedi and supply-side constraints. This inflation affects not only consumer prices but also producer prices, with businesses facing higher costs that are passed on to consumers. Additionally, official statistics show a youth unemployment rate of 12%, but this figure underrepresents the reality as many young people are trapped in low-paying informal jobs. The lack of stable and well-paying employment opportunities weakens the multiplier effect of economic growth, leaving much of the population with unstable livelihoods despite reported economic expansion. The disconnect between macroeconomic indicators like GDP growth and the real experiences of Ghanaians suggests that while the economy may be seen expanding on paper, this growth has not translated into meaningful improvements in people’s lives and this is what I think these reporters and Blooberg must be concerned about.
- Currency Depreciation: The Ghanaian cedi has weakened further, trading at 15.7 cedis per US dollar by September 2024, exacerbating inflation and driving up the cost of imported goods like fuel, food, and essential commodities. This depreciation increases the strain on foreign reserves, making it harder for both businesses and individuals to afford goods and services from abroad. As a result, the weakening currency is deepening economic challenges, eroding purchasing power, and worsening the inflationary environment. In light of these conditions, a crucial question arises: How can the economy truly expand when currency depreciation undermines people’s ability to spend and save? As Dr. Bawumia once famously said, “When the fundamentals are weak, the exchange rate will expose you.” This situation exemplifies that statement, highlighting that without addressing the underlying economic issues, growth may appear on paper but will not translate into real improvements for the population.
- Debt Crisis and Austerity: Ghana is grappling with a severe debt crisis, with public debt reaching 83.6% of GDP by 2024. The country is in the second year of an IMF program following a $3 billion bailout aimed at stabilizing the economy. However, this program has imposed austerity measures, such as higher taxes, cuts to public spending, and wage constraints in the public sector, which have triggered widespread public dissatisfaction. I am of the view that the IMF’s approach is outdated for developing countries, as it prioritizes debt repayment over sustainable development, deepening poverty and inequality. Moreover, dependence on such programs often erodes national economic sovereignty, trapping countries like Ghana in cycles of debt and external control without addressing the root causes of their economic struggles. This issue deserves more focus than the optimistic headlines of economic growth as written by these Bloomberg reporters.
- Socioeconomic Realities: Despite reported economic growth in Ghana, actual progress in job creation has not matched the increasing labor force, particularly affecting the youth. In 2024, youth unemployment stands at an estimated 12%, with underemployment being even more significant. Many young people are stuck in informal or low-paying jobs, leading to widespread economic insecurity. For instance, poverty rates in Accra affect around 27% of its 2.7 million residents, while in Kumasi, it impacts 60% of its 3.9 million people. The persistence of poverty and inequality is compounded by mismanagement and corruption as well as soaring inflation. These disparities underscore a gap between the reported GDP growth and the lived experiences of many Ghanaians, highlighting ongoing challenges under the Akufo-Addo-Bawumia administration.
Agricultural Challenges: Under the Akufo-Addo-Bawumia administration, Ghana’s agricultural sector has fallen short of expectations, marked by a significant decline in the cocoa subsector and ongoing challenges in accessing essential inputs despite the government’s “Planting for Food and Jobs” initiative. Additionally, rising food prices have increased economic pressures on rural communities, exposing a stark disparity between reported progress and the difficult realities faced by many farmers.
In summary, although Bloomberg reports robust growth in key sectors, the broader reality shows a population struggling with inflation, unemployment, debt, and inequality. The purported economic expansion appears questionable and may reflect manipulated figures, as it has not translated into better living standards for the majority of Ghanaians.
Dr. Bernard L. Tetteh-Dumanya is a seasoned Financial Economist & Consultant with an illustrious career spanning 29 years across academic, corporate, and agribusiness sectors. His extensive professional journey includes pivotal roles at esteemed institutions such as UBA Ghana, SIC Financial Services, Empretec Ghana, and the Swiss International Finance Group, reflecting his profound understanding of global finance. Renowned as a pioneer in risk management, compliance, and corporate strategy, Dr. Tetteh-Dumanya has made significant contributions to the Ghanaian financial landscape. He has been instrumental in spearheading initiatives in Venture Capital, business/financial reengineering, and fundraising, thereby playing a pivotal role in the growth and development of numerous entities. Driven by a fervent dedication to capacity development, Dr. Tetteh-Dumanya has offered consultancy services to a diverse array of local and multinational organizations notably GIZ, AGRA, SNV, DANIDA, and USAID among others. His expertise in financial and business domains is multifaceted, showcased through his adept navigation of complex challenges and his commitment to driving sustainable growth in every endeavor.
For inquiries, Dr. Tetteh-Dumanya can be reached at: mafioba@yahoo.com
