Data from the World Bank has shown that Ghana experienced the highest exchange rate loss in Africa between January 1, 2022, and January 1, 2023, with a depreciation of nearly 40%.
The World Bank notes that exchange rates across the region largely depreciated during this period, leading to increased costs for imported goods, including food and energy.
The Bretton Wood institution said countries such as Ghana that practice “crawl-like arrangements” recorded very sharp exchange rate depreciation. This was due to the expensive fiscal measures that are often used to limit the pass-through of exchange rates to inflation, with the resulting deteriorating fiscal position potentially further stressing exchange controls and exacerbating inflationary pressures.
“One key concern for managed and crawl-like arrangements is the possibility that parallel markets can influence exchange rate movements. Capital controls that often accompany such arrangements can lead to scarcity of forex reserves, forcing the government to prioritize specific transactions and charge a premium for official foreign exchange transactions”.
Sudan ranked second, experiencing a currency depreciation of approximately 23% during the same period. Following closely were Malawi (-20%), The Gambia (-16%), and Madagascar (-10%), securing the third, fourth, and fifth positions, respectively.
Fitch Solutions has provided a forecast, indicating that the Ghana cedi is expected to close at ¢11.40 against the US dollar by the end of 2023. This projection is lower than the earlier ¢12.40 estimate made earlier in the year when Ghana had yet to finalize an agreement with the International Monetary Fund for a bailout package.
The UK-based firm is also anticipating a further improvement in the exchange rate, with ¢10.90 to one US dollar in 2024. This is expected to be driven by anticipated inflows resulting from the International Monetary Fund program and an increase in investor confidence.
Yoweri Museveni, president of Uganda, has once more denounced the World Bank’s decision to stop providing funds, stating that the institution is misguided if it believes that the action will scare Ugandans.
He said this in a statement on his X (formerly Twitter) account.
The World Bank was described by Mr. Museveni as “shallow and intolerable imperialist actors who do not know where to stop” on Thursday.
due to a contentious anti-homosexuality law that was approved in May and went against the principles of the World Bank.
The law has garnered criticism from all over the world for its severe penalties, which include imprisonment or execution for those who commit specific same-sex behaviours.
Last week, Mr. Museveni responded to the World Bank by accusing it of trying to force Uganda to change the legislation by stopping funds, but he said that Uganda will still advance even without the World Bank’s assistance.
Mr. Museveni reaffirmed on Thursday that the financial withdrawal will not stop Uganda’s economic progress. The World Bank’s dramatic action, he said, would actually help Uganda’s efforts to lower its external debt and increase its independence.
Even while Uganda still has a number of Western supporters, Mr. Museveni claimed that they are afraid to continue their support for his country.
He vowed to identify alternative credit sources to counteract this action.
In response to the potential repercussions of this move, a junior finance minister mentioned that the country might need to adjust its budget accordingly.
The World Bank announced on Tuesday that it deemed the law, which includes the death penalty for specific same-sex activities, contradictory to its principles.
Consequently, the Bank would suspend new funding until it could evaluate methods to prevent discrimination in projects funded by it.
Uganda currently has an ongoing portfolio of $5.2 billion with the World Bank, and the existing projects within this portfolio will remain unaffected.
The anti-LGBTQ legislation, enacted in May, has garnered criticism from both local and international human rights organisations as well as Western governments, despite its domestic popularity.
Museveni’s statementhighlighted that Uganda is striving to minimise borrowing and will not bow to pressure from foreign entities.
“It is, therefore, unfortunate that the World Bank and other actors dare to want to coerce us into abandoning our faith, culture, principles, and sovereignty using money. They really underestimate all Africans,” he said.
Museveni said that if Uganda needed to borrow, it could tap other sources and that oil production, expected to start by 2025, would provide additional revenues. He added that he hoped the World Bank would reconsider its decision.
The government will ask parliament to vote through a revised 2023–2024 (July-June) budget to reflect the potential financial impact of the lending suspension, junior finance minister Henry Musasizi told parliament on Thursday.
“We shall be coming in one week or so… to ask for your approval,” Musasizi told lawmakers.
In June, the United States imposed visa restrictions on some Ugandan officials in response to the law. President Joe Biden also ordered a review of U.S.aid to Uganda.
The World Bank has provided a loan of $200 million to the government, aimed at aiding the coconut industry and three additional tree crop commodities. The objective is to enhance production for the purpose of exporting these products.
Under the ‘Tree Crop Diversification Project’, the provided funds will aid the Tree Crops Development Authority (TCDA) in conducting research and development on various strains of coconut, cashew, mango, and rubber.
The funding will also be allocated towards enhancing the governance of institutional value chains, enhancing the ability of tree crops to adapt to climate change, and bolstering resilience. Furthermore, it will aid in addressing deficiencies in post-harvest management and value addition for the four chosen tree crops.
Dr Bryan Acheampong, the Minister of Food and Agriculture, announced this in a speech read on his behalf during the launch of the 2023 International Coconut Festival in Accra on Thursday.
The TCDA is expected to work closely with the Council for Scientific and Industrial Research (CSIR) to develop disease-resistant varieties for the four tree crops.
The project, the minister said would help upscale the production of the selected tree crops for export and position Ghana as a leader in the global market.
The International Coconut Festival is scheduled from 26 to 28 September 2023, in Takoradi of the Western Region.
The event would be characterised by exhibitions, seminars, networking, capacity-building workshops for farmers and negotiations with financial institutions for funding.
“Invest in Ghana’s coconut sector for an Inclusive Economic Transformation and Improved Climate and Social Resilience” was the theme for the Festival.
The event is being jointly organised by the Ghana Export Promotion Authority, the Western Regional Coordinating Council, the African Coconut Group and the Tree Crops Development.
Albert Kassim Diwura, the deputy chief executive officer, GEPA, expressed optimism that the launch of the Coconut Festival would propell the coconut agenda to greater heights.
“We are excited because this project, which was started to improve the coconut sector, is gathering momentum and has the potential to position Ghana as a premier hub for coconuts on the African continent.
In 2017, he said, the authority started the Coconut Revitalization Programme, to improve the supply capacity of the value chain and revitalise the once-struggling coconut sector.
The rising global demand for coconuts was the driving force behind the intervention, he added.
“While we acknowledge that coconut production is a multi-billion-dollar industry, it is important to note that all the top-producing nations, mostly in Asia, are earning significant rewards as a result of the significant investments in the value chain, Diwura noted.
He called on the business community in Ghana to explore opportunities within the coconut industry.
“Ghana is well-positioned to emerge as a leading global supplier of coconut products, thereby generating significant export revenues.
“GEPA has undertaken notable and impactful investments in the sector since 2017. We have procured and disseminated disease-resistant coconut seedlings to farmers across the major coconut farming regions in the country”
To date, nearly 800 seedlings have been distributed, covering over 12,500 acres.
The Western Region has also outdoored a programme to distribute five million seedlings which was launched in 2020.
Diwura gave the assurance that GEPA would continue to support the coconut sector with unwavering commitment until it became self-sufficient.
He acknowledged the considerable investments made by the Ministry of Food and Agriculture, as well as the Ministry of Local Government and Rural Development, through the Planting for Export and Rural Development (PERD) programme.
Also, he acknowledged the crucial role the African Coconut Group, led by Davies Korboe, its chairman played in promoting sectoral growth.
The government’s establishment of the TCDA is noteworthy and supports its ardent advocacy.
The TCDA’s initiatives are poised to fortify the sector, with coconut being a vital tree crop within its purview, he said.
The authority earnestly called for enhanced inter-institutional cooperation to accelerate the coconut sector’s advancement.
“We remain optimistic and encouraged by the support we are receiving, and we invite other stakeholders to join hands and contribute to these endeavours.
“These coordinated efforts have the potential to firmly position Ghana as a global leader in coconut production and export,” Diwura said.
The past five decades, the Authority has been steadfast in its mission to cultivate, facilitate, and elevate Ghanaian exports through diversification, leading to augmented export revenue and economic progress.
The authority, he said, in recent years witnessed the implementation of various initiatives that were yielding tangible outcomes.
Notably, the implementation phase of the National Export Development Strategy (NEDS), which commenced last year, with a goal to generate a minimum of US$25.3 billion by 2029.
While this objective may be formidable, Diwura said, GEPA was unwavering in its resolve to fulfil that vision.
“Consequently, we have deepened collaborations with both public and private stakeholders in the export sector, culminating in the establishment of the NEDS Coordinating Secretariat, which has been operational since 2021.
The exponential growth of countries like China and India is a testament to the transformative potential of export-oriented policies. Our nation’s progress hinges on substantial investments in the export sector,” he noted.
According to statistics from the 2022 non-traditional exports, the earnings for fresh and processed coconuts stood at US$6.3 million, noting that the figure underscored the substantial potential for growth.
He believed that proper policies and targeted interventions had the capacity to harness the potential of coconut sector to generate more revenue for the nation.
He was of the opinion that the Festival would be one of the avenues to showcase the coconut sector’s potential to local and international investors.
The coconut value chain, he said, presented numerous opportunities for small and medium-sized enterprises (SMEs) with technical and financial support, to enable them experience exponential growth, extend their market reach domestically and abroad.
He reaffirms GEPA’s unflinching dedication to the coconut industry and believed in its potential to generate substantial export revenue for the country.
The authority, he said, was resolutely dedicated to collaborating with its stakeholders in elevating the coconut value chain to unprecedented levels.
The World Bank has rendered an explanation as to why Uganda’s anti-LGBTQ bill contravenes its principles.
Unfortunately the institution has made a decision to halts financial aids to Uganda as a result of their stance on LGBTQ.
Details of the statement are here below:
In relation to Uganda, the World Bank Group has issued the subsequent communication:
The principles upheld by the World Bank Group are in direct contrast to Uganda’s Anti-Homosexuality Act.
Our conviction is that our mission to eliminate poverty on a sustainable planet can only prosper if it encompasses individuals of all backgrounds, regardless of race, gender, or sexual orientation.
This legislation undermines the strides we are making in this direction. Our endeavors worldwide are rooted in the ideals of inclusivity and non-discrimination.
Upon the immediate enactment of this law, the World Bank promptly dispatched a team to Uganda for the purpose of assessing our ongoing initiatives in light of this new legal framework.
The outcome of this evaluation has determined the necessity for supplementary actions to ensure that our projects adhere to our established environmental and social standards. Our objective revolves around safeguarding sexual and gender minorities against biases and exclusions within the projects we financially support. Deliberations are currently underway with the relevant authorities to implement these actions.
We shall withhold the presentation of any fresh public funding for Uganda to our Board of Executive Directors until the effectiveness of these supplementary measures has been verified.
To a significant degree, the introduction of external oversight and mechanisms for addressing grievances will empower us to take remedial measures whenever deemed necessary.
The World Bank Group boasts a longstanding and mutually beneficial rapport with Uganda. Our commitment to aiding all Ugandans in their pursuit of escaping poverty, accessing essential services, and enhancing their quality of life remains unwavering, encompassing each and every individual without exception.
Ghana has secured a position among the top 10 countries globally grappling with the most significant food inflation.
As outlined in a Food Security Report published by the World Bank, Ghana’s Nominal Food Inflation (year-on-year) of 54% has placed the nation at the 8th rank in this distressing scenario.
Conversely, its Real Food Inflation (year-on-year) of 12% has positioned it at the 9th spot.
Leading the Nominal Food Inflation category is Venezuela, with a staggering year-on-year inflation rate of 414%. Following suit are Lebanon (280%), Zimbabwe (256%), Argentina (117%), Suriname (71%), Egypt (66%), and Sierra Leone (58%), in the 2nd, 3rd, 4th, 5th, 6th, and 7th places, respectively.
Regarding Real Food Inflation, the top positions are seized by Zimbabwe (80%), Egypt (30%), Lebanon (26%), Turkey (16%), Rwanda (15%), Burundi (14%), Lao (14%), and Sierra Leone (13%), holding the 1st, 2nd, 3rd, 4th, 5th, 6th, 7th, and 8th positions respectively for the highest food inflation rates.
The recent report covers data from February 2023 to May 2023, reflecting the prevailing situation regarding food price inflation. The findings reveal a notable surge in inflation rates across various low- and middle-income nations.
In particular, a substantial 63.2% of low-income countries, 79.5% of lower-middle-income countries, and 67.0% of upper-middle-income countries are grappling with inflation rates exceeding 5%, with many facing double-digit inflation figures.
Remarkably, even among high-income nations, a significant 78.9% are contending with elevated levels of food price inflation. This global trend is particularly pronounced in diverse regions including Africa, North America, Latin America, South Asia, Europe, and Central Asia.
Furthermore, in terms of real value adjustments, food price inflation has outpaced the broader inflation rate (measured by the year-on-year alteration in the Consumer Price Index) in a substantial 80.1% of the 166 countries covered in the report, where both food CPI and overall CPI indexes are available.
The report also disclosed an uptick in maize and wheat prices, concluding at 12% and 14% higher, respectively, following their decline in the initial half of July 2023. This shift played a pivotal role in driving up the cereal price index, while rice prices, in contrast, have maintained their stability.
When considering a year-on-year comparison, maize and wheat prices have witnessed a decrease of 15% and 17% respectively, whereas rice prices have exhibited a 16% increase. Moreover, in comparison to January 2021, maize, wheat, and rice prices have escalated by 8%, 11%, and 3% respectively.
The 2023 State of Food Insecurity and Nutrition in the World report spotlights the global landscape of hunger and food insecurity, while also addressing the challenges and prospects associated with urbanization within agrifood systems.
The report has voiced concern over Russia’s withdrawal from the Black Sea Grain Initiative (BSGI) within the global markets.
Ghana is facing a serious food inflation crisis, as it ranks among the top 10 countries in the world with the highest increase in food prices, according to a new report by the World Bank.
The report, titled Food Security Update: World Bank Response to Rising Food Insecurity, shows that Ghana’s nominal food inflation (year-on-year) was 54% as of May 2023, placing it at the eighth position globally.
Its real food inflation (year-on-year), which takes into account the overall inflation rate, was 12%, placing it at the ninth position.
The report attributes the high food inflation in Ghana and other low- and middle-income countries to various factors, such as supply chain disruptions, currency depreciation, fuel price hikes, weather shocks, and COVID-19 pandemic impacts.
The report warns that high food inflation could worsen poverty, hunger, and malnutrition among vulnerable populations.
The report also provides data on global food commodity prices, which have increased significantly since January 2021. The report notes that maize and wheat prices rose by 12% and 14%, respectively, in July 2023, while rice prices remained stable.
On a year-on-year basis, maize and wheat prices were 15% and 17% lower, while rice prices were 16% higher.
The report also highlights the state of global hunger and food insecurity, citing the latest edition of the State of Food Insecurity and Nutrition in the World report by the Food and Agriculture Organization (FAO) and other UN agencies.
The report estimates that around 811 million people suffered from chronic hunger in 2020, an increase of 118 million from 2019. The report also projects that around 660 million people will still face hunger by 2030, even if current trends are reversed.
The report also discusses the challenges and opportunities that urbanization presents for food systems, especially in Africa and Asia. The report argues that urbanization can create new markets and jobs for rural producers and processors, as well as improve access to diverse and nutritious foods for urban consumers.
However, urbanization can also pose risks for food security and nutrition, such as increased dependence on food imports, exposure to price shocks, loss of agricultural land, and environmental degradation.
The report also mentions the recent interruption of the Black Sea Grain Initiative (BSGI), an agreement among Russia, Ukraine, Turkey and the UN to facilitate the safe transportation of grain and foodstuffs from Ukrainian ports amid the ongoing war.
The report expresses concern about the potential impact of Russia’s withdrawal from the BSGI on global food markets and prices, as Ukraine is one of the world’s largest grain exporters.
The report concludes by outlining the World Bank’s response to rising food insecurity, which includes providing financial and technical support to countries to address immediate and long-term challenges.
The report also calls for more coordinated and inclusive actions from all stakeholders to transform food systems and achieve the Sustainable Development Goals.
In the aftermath of the adoption of a strict rule barring same-sex relationships in Uganda, the World Bank has halted fresh financing to that nation.
The death penalty is applied for “aggravated homosexuality” and a 20-year prison sentence is imposed for “promoting” homosexuality under the anti-LGBT law that President Yoweri Museveni signed in May.
The law “fundamentally contradicts the World Bank Group’s values,” the World Bank said in a statement on Tuesday, adding that its vision “includes everyone irrespective of race, gender, or sexuality.”
According to the statement, “no new public financing to Uganda will be presented to our Board of Executive Directors” until the effectiveness of fresh initiatives put out in the wake of the new legislation has been evaluated.
Uganda has criticized the action as being unfair and contradictory.
“There are many Middle East countries who do not tolerate homosexuals, they actually hang and execute homosexuals. In the US many states have passed laws that are either against or restrict activities of homosexuality… so why pick on Uganda?” Uganda’s state minister for foreign affairs Okello Oryem was quoted by the Reuters news agency as saying.
According to Reuters, the World Bank had given Uganda $5.4 billion ($4.2 billion) in development finance through the end of 2022, primarily for health and education projects.
The International Monetary Fund (IMF) approved the delivery of $120 million to Uganda in June but issued a warning about harsher funding limitations due to the anti-gay law.
In addition to the US, the World Bank has imposed penalties on Uganda because of its anti-homosexuality law.
An economist, Dr. Ishmael Yamson, has attributed part of Ghana’s current economic situation to the World Bank and the International Monetary Fund (IMF).
He criticized these Bretton-Wood institutions for not intervening when the government engaged in excessive borrowing without repercussions.
According to him, although the annual reports from these institutions warned of potential debt distress, mere warnings were insufficient. Instead, he argued that they should have taken a more assertive stance by threatening to impose sanctions if the government did not heed their warnings.
Dr. Yamson stated that the failure of the World Bank and IMF to effectively exercise their oversight role on the country’s economy has contributed to the nation’s current debt distress situation.
“I have always said that sometimes the Fund and the Bank have to share in the blame because they themselves don’t say it as it should be said,” Dr. Yamson said on PM Express Business Edition.
“They were aware, long time, that the government was doing things that would push this country into a crisis. And I can tell you that the crisis that we have today I haven’t seen it all my life in this country. Never. If you go back and look at the statistics, here’s nothing like this before.
“Yet, every year they issue the report and they say to government but they’re not firm enough to say ‘look, we can see the trend taking you this way and we will apply sanctions if there are any such things.’
“But I believe that the Fund and the Bank have a greater responsibility also to themselves because I know they don’t want Ghana to fail. And if they don’t want Ghana to fail then they must behave in a way that pushes Ghanaian government. I mean why?
“When we were borrowing literally every year were they not aware? All that they’ll put in their report is that the excessive borrowing will lead you to debt distress, simple sentence. And beyond that what else did they do? Did they say to government stop? Never,” he said.
The latest Economic Update by the World Bank indicates that Ghana’s economy is expected to fully recover its potential by the year 2025.
However, the report, titled “Price Surge: Unraveling Inflation’s Toll on Poverty and Food Security,” highlights the country’s current challenging economic outlook.
Economic growth is projected to slow down significantly, reaching 1.5% in 2023 and remaining depressed at 2.8% in 2024.
Despite these challenging conditions, the Ghanaian economy is anticipated to rebound and return to its potential growth rate by 2025.
The report furthered that “A combination of domestic imbalances and external shocks in 2022, led to macroeconomic challenges in Ghana. The year was marked by currency depreciation, rising inflation, and tumbling investor confidence. Pre-existing fiscal vulnerabilities such as mounting debt burden, a rigid budget weakened by high energy sector costs and chronically low public revenues, were deepened by difficult global economic conditions”.
“As a result of efforts to address macroeconomic instability, corrective fiscal and monetary policies are expected to influence total demand and slow down non-extractive GDP growth”, said Pierre Laporte, World Bank Country Directorfor Ghana, Liberia, and Sierra Leone.
“High inflation, increased interest rates, and macroeconomic uncertainties will keep private consumption and investment growth below pre-pandemic levels, leading to subdued non-extractive growth in the short term; but growth will begin to recover to its potential by 2025 as drag from fiscal consolidation fades and macroeconomic stabilization and structural reforms start bearing fruit.”
The report advised that in addition to addressing the immediate macroeconomic crisis, the authorities should prioritize structural reforms to tackle its underlying causes, enhance economic growth, and strengthen economic resilience:
The report recommended Ghana to focus on sustainable domestic revenue collection, with particular emphasis on streamlining tax incentive regimes and enhancing revenue administration.
Tighter expenditure controls were suggested as a means to improve budget execution accuracy and prevent the accumulation of new arrears.
The government was urged to fully address the energy sector’s shortcomings, which pose a threat to fiscal sustainability. To achieve this, the report called for the extension, expansion, and thorough implementation of the Energy Sector Recovery Programme.
The report emphasized the need for the government to increase Foreign Direct Investments by improving the investment climate. This can be achieved through enhancing transparency, accessibility, and the quality of business regulation and regulatory governance.
Regarding climate change adaptability, the report suggested that the government should prioritize investments based on recommendations from the World Bank’s recent Country Climate and Development Report (CCDR). These investments should aim to maximize resilience benefits while remaining cost-effective.
“Macroeconomic shocks, particularly inflation tend to affect the poor the most. The next two years will be very tricky for Ghana’s poverty reduction efforts. Without bringing the economy back on track, no meaningful poverty reduction can happen. Concurrently, safety nets to protect the most vulnerable need to be enhanced to ensure sustainable poverty reduction and shared prosperity.” said Kwabena Gyan Kwakye, World Bank Economist and co-author of the report.
“Expanding and increasing transfers of the Livelihood Empowerment Against Poverty (LEAP) could ensure the poorest are able to cope and build resilience to future shocks”, he added.
The report also indicated that high inflation in 2022 has had significant effects on food security and poverty in Ghana and has eroded the purchasing power of Ghanaian households, leading to a deterioration in living standards and ultimately, worsening poverty and food insecurity.
The World Bank has stated that the increasing cost of goods and services in 2022 resulted in approximately 850,000 Ghanaians falling into poverty.
The Bank said this in its latest Ghana Economic Update report titled: “Price Surge: Unravelling Inflation’s Toll on Poverty and Food Security,” launched in Accra on Wednesday.
The inflationary pressures, the Bank said, had led to a deterioration in living standards and ultimately, worsened poverty and food insecurity among Ghanaian households.
It recommended that policymakers increased efforts to restore economic stability, alleviate the plight of farmers, including the high cost of fertilizer, and widen the reach of social intervention programmes to protect the vulnerable.
The Bretton Wood Institution also recommended that in the medium-to-long-term, policy actions focused more on investments in agriculture research and technology transfers.
Such investments, the Bank said, should be aimed at helping increase domestic production and reduce production costs, while improving the quality and safety of food.
In an interview with the Ghana News Agency, Mr Paul Corral, A Senior Economist with the World Bank, said the Bank used monetary indicators to measure the annual household income and expenditure and observed that inflation had pushed a lot of people into poverty.
Speaking at the launch of the report, Mr Kwabena Gyan Kwakye, a World Bank Economist, explained that the 2022 macroeconomic shocks, particularly inflation, had more adverse impact on the poor.
He said the next two years (by 2025), where the country was expected to recover from the current economic crisis, would “be very tricky for Ghana’s poverty reduction efforts”.
“Without bringing the economy back on track, no meaningful poverty reduction can happen. Concurrently, safety nets to protect the most vulnerable need to be enhanced to ensure sustainable poverty reduction and shared prosperity,” he said.
“Expanding and increasing transfers of the Livelihood Empowerment Against Poverty (LEAP) could ensure the poorest are able to cope and build resilience to future shocks,” the World Bank Economist and co-author of the report said.
Mr Ashwini Sebastian, a Senior Agricultural Economist with the World Bank, also called for support for farmers to adjust to global demand and take advantage of market opportunities.
She said that should be a long-term focus by policymakers to mitigate the impact of inflation on food security.
“This is particularly relevant since many of the poor are farming households. Policies should, therefore, be evidence based and aimed at alleviating the different constraints farmers face,” he added.
In the 2017 Ghana Living Standards Survey by the Ghana Statistical Service (GSS), 45.6 per cent of Ghana’s population was multidimensionally poor, with 23.4 per cent others being consumption expenditure poor.
In essence, they were deprived of electricity, water, housing, sanitation, including access to toilet facilities, school attendance and attainment, nutrition and health insurance.
Mr John Foster Agyaho, a Principal Statistician, GSS, explained during a panel discussion that about a third of the items in the Consumer Price Index (CPI) basket for measuring inflation was food.
He, said it was important for the Government to prioritse connecting road networks to farmers by addressing the transportation and storage bottlenecks, and implement proactive measures to attract more youth into agriculture.
Ghana’s inflation stood at 54.1 per cent in December 2022, which was characterised by a surge in food costs, a report by GSS showed.
It was during that period that a Ghana News Agency report revealed that workers, formal and informal, had resorted to walking long-distances, riding bicycles, and engaging in carpooling to manage the economic hardship.
Meanwhile, the World Bank report signalled that Ghana’s economy would recover to its potential growth by 2025.
This is dependent on government’s implementation of structural reforms to tackle the root causes of the economic crisis, boost economic growth, and build economic resilience through the country’s US$3 billion 17th financial bailout programme with the International Monetary Fund (IMF).
“Growth will begin to recover to its potential by 2025 as drag from fiscal consolidation fades and macroeconomic stabilisation and structural reforms start bearing fruit,” Mr Pierre Frank Laporte, World Bank Country Director for Ghana, Liberia, and Sierra Leone, said.
Around 700 micro and small enterprises, both in the formal and informal sectors, focused on skills development and job creation, are set to benefit from the newly established $60 million Ghana Skills Development Fund (GSDF).
The fund is part of the $200 million Ghana Jobs and Skills Project, supported by the World Bank, with the aim of enhancing productivity, promoting competitiveness, and increasing income-earning capacities, particularly among women and low-income groups.
The five-year GSDF Project, which aligns with the government’s strategic plan to revamp technical and vocational education and training (TVET), is being implemented by the Commission for Technical and Vocational Education and Training (CTVET) under the Ministry of Education, in collaboration with the International Development Association of the World Bank.
The initiative was launched by Ms Gifty Twum-Ampofo, Deputy Minister of Education in charge of TVET, during a ceremony in Accra.
The fund began implementation in August 2022, with the first call for applications receiving approvals and disbursing funds to 105 enterprises.
The second call for applications is scheduled for August 1 to August 31, 2023, and is expected to benefit approximately 200 enterprises.
Chairperson of the GSDF Steering Committee, Mr. Kwasi Asamoah-Baffour, noted that new enterprises and those operating for less than three years would not be eligible for the grant.
Additionally, enterprises in sectors with high employment growth potential and those with a significant representation of female employees and individuals with disabilities would have an advantage in the selection process.
Ms. Twum-Ampofo emphasized that the GSDF support would not be in the form of a loan and beneficiaries would not be required to repay the funds received. The initiative aims to stimulate job creation, enhance skills development, and contribute to the overall economic growth and competitiveness of Ghana.
“However, implementation of grantee projects will need to result in desired outcomes of the GSDF, which include increased productivity, quality, competitiveness, job creation, and increased incomes,” she said.
According to Ms. Twum-Ampofo, the Government’s objective is for the Ghana Skills Development Fund (GSDF) to support the skills upgrading of employees in beneficiary enterprises and companies, enabling them to improve productivity and adapt to emerging technologies. The Fund is also expected to contribute to the enhancement of skills among master craftspeople and self-employed graduate apprentices.
Ms. Elena Glinskaya, Lead Economist at the World Bank and Co-Task Leader of the Ghana Jobs and Skills Project, praised the GSDF as an innovative initiative and expressed the World Bank’s commitment to supporting Ghana in building its human resource base for sustainable development.
Dr. Fred Kyei Asamoah, the Director General of CTVET, emphasized that the selection of organizations to benefit from the Fund would be based on merit. He further stated that the GSDF would serve as a platform to mobilize financing for technical and vocational education and training (TVET), aligning with the government’s commitment to using TVET as a tool to develop essential skills and provide decent employment opportunities.
The World Bank Managing Director of Operations, Anna Bjerde, has advised the Ghanaian government to implement an emergency action plan to tackle the country’s energy crisis.
Bjerde emphasized the World Bank’s commitment to offering technical guidance to ensure Ghana’s energy sector supports economic resilience.
During a press conference in Accra, Bjerde highlighted that while Ghana’s energy challenges are not unique, they demand immediate attention.
Neglecting to address these issues promptly could worsen the situation and impose greater financial burdens on the state, diverting resources from other critical areas.
To address this, Bjerde stressed the importance of adopting an emergency action plan to effectively tackle the energy crisis.
“The problems that Ghana is experiencing are not unique to Ghana, but they are very serious because if they are not addressed they will get worse and worse. If not arrested and addressed with really an emergency action plan it will get worse and it will cost the state more to keep the energy sector running at a time when they need to spend money on other things.
“The World Bank is providing first of all technical advise on what needs to be done, so the metering, the billing, the collection and making sure that you have an account set up so from which all the different flows of the revenues collected flows to where it needs to go so that those who are generating the electricity are paid.”
The World Bank has warned Ghana that failing to adopt a crucial action plan to address its present energy concerns could put it at danger of facing financial difficulties and losing its inflows of foreign direct investment to other nations.
According to its Managing Director of Operations, Anna Bjerde, proactive solutions should be taken immediately to address the problems metering, invoicing, and revenue collection within the industry face.
Speaking to the media at a press conference, she said that her organization will offer technical assistance to the government and other players in order to prevent the collapse of the industry.
“There has been over the last years a deterioration in the performance of the energy sector particularly in the financial performance and we trying to help with metering, billing, and collection”.
“Revenue collected should be channeled to its right sources which is a big part of our dialogue right now. Government has to be proactive in addressing some of these issues not to worsen the current challenges”, she said.
According to her, the World Bank would support Ghana’s budget, especially in the area of energy to improve the sector.
“The problems that Ghana is facing are not unique to Ghana but they are very serious because if they are not addressed they will get worse and worse”.
“We very much want to support the government budgets to support its actions to make sure the energy sector is fit for purpose”, she added
The World Bank had earlier indicated that Ghana’s energy sector debt is a major contributor to the debt country’s woes.
The Bretton Wood institutions said it identified certain factors that were driving the country’s debt situation.
In a push to create fiscal space, the World Bank has called on the government to take decisive action in reducing subsidies in certain sectors of the economy.
However, the bank emphasized the importance of conducting a comprehensive economic and social analysis before implementing subsidy reforms, to ensure that their removal does not disproportionately affect jobs and the livelihoods of vulnerable groups.
Managing Director of Operations at the World Bank, Anna Bjerde, explained that subsidies not properly targeted impose a burden on the national budget and limit the government’s ability to allocate resources for critical investments.
“It is much better to have targeted subsidy regimes that protect those who truly need assistance, rather than relying on general subsidies as a rule of thumb. The recommendation is to identify where subsidies exist and gradually reduce them in a responsible manner, commensurate with the necessary adjustments,” Bjerde stated.
The call from Ms. Bjerde aligns with a recent World Bank report, “Detox development: Re-purposing environmentally harmful subsidies,” which revealed that globally, trillions of dollars are spent on inefficient subsidies in sectors such as agriculture, fishing, and fuel.
The report emphasized that these subsidies are counterproductive, as they contribute to environmental pollution.
Since the implementation of the Planting for Food and Jobs (PFJ) policy in 2017, the Ghanaian government has dedicated significant funds to provide subsidized seedlings and fertilizers to farmers.
Last year, Finance Minister Ken Ofori-Atta disclosed that the government spent GH¢2.47 billion on the PFJ program between 2017 and 2021.
With the expenditure of GH¢614 million in 2022 and GH¢660 million in 2023, the total subsidy expenditure now stands at GH¢3.74 billion.
When asked about Ghana’s subsidy administration, Ms. Bjerde acknowledged that the decision to remove subsidies is a challenging one but emphasized its importance.
The World Bank Country Director for Ghana, Liberia, and Sierra Leone, Pierre Laporte, aslo expressed the bank’s commitment to providing technical support to the government in removing subsidies in the agriculture sector.
Laporte stated that the bank’s active portfolio in Ghana amounts to $3.6 billion, underscoring its dedication to helping the country overcome economic challenges.
Additionally, Laporte emphasized the need for the government to review its high tax exemption regime to generate the necessary revenue for accelerated development.
The World Bank is currently working on a budget support package of around $300 million, expected to be approved by the end of the year, to assist Ghana’s economic reform program.
They also anticipate financial sector support cooperation of $250 million before year-end, demonstrating their commitment to supporting Ghana in addressing its current challenges and advancing its economic growth.
Managing Director of Operations at the World Bank, Anna Bjerde, has urged the Ghanaian government to implement an emergency action plan to tackle the country’s energy challenges.
Bjerde emphasized that the World Bank is dedicated to providing technical assistance to ensure that Ghana’s energy sector contributes to economic resilience. These remarks were made during a press conference held in Accra.
Bjerde acknowledged that while Ghana is not alone in facing energy difficulties, prompt action is necessary.
She cautioned that failure to address these issues could result in financial burdens for the state, diverting resources from other critical areas.
“The problems that Ghana is experiencing are not unique to Ghana, but they are very serious because if they are not addressed they will get worse and worse.
“If not arrested and addressed with really an emergency action plan it will get worse and it will cost the state more to keep the energy sector running at a time when they need to spend money on other things.
“The World Bank is providing first of all technical advise on what needs to be done, so the metering, the billing, the collection and making sure that you have an account set up so from which all the different flows of the revenues collected flows to where it needs to go so that those who are generating the electricity are paid.”
In a significant development, the World Bank has concluded an agreement to provide Ghana with $900 million in support of the country’s ongoing reforms. This substantial financial commitment highlights the bank’s commitment to assist Ghana in its pursuit of comprehensive reforms aimed at fostering sustainable development and economic growth.
The support, which is under the Development Policy Operations (DPO) for the period 2023 to 2025, is expected to front-load the first tranche to the country by November if Ghana is able to meet prior actions and present the final document to the World Bank Executive Board by the end of October this year.
At a meeting with the World Bank Managing Director for Operations, Anna Bjerde, in Accra yesterday, the Minister of Finance, Ken Ofori-Atta, stated that the government was committed to completing all prior actions by October this year.
“I would like to personally assure you that the government has prioritised the completion of all prior actions by end of August, 2023, to ensure the first DPO in the series is presented to the World Bank Board in early October,” the Finance Minister said, adding, “we count on your support for this to happen”.
During discussions in his office and at a banquet held in her honour, Mr Ofori-Atta appealed to the World Bank to front-load the DPO amount for 2023 to $500 million.
A World Bank Mission which visited the country between June 19-23 reached the agreement on the reforms to be presented to the board in October this year.
Critical
“This is critical for the International Monetary Fund (IMF)-Supported PC-PEG, for the continuous stability of the cedi and broader macroeconomic stability,” Mr Ofori-Atta said.
He added that it was the belief of the government that with the requisite resources, the country could become “the poster child for a robust, sustainable and green post-COVID economic build-back on the continent.”
The Finance Minister stressed that given the DPO’s strong emphasis on fostering resilience to economic and climate shocks, the government was being intentional about building a low carbon and climate resilient economy.
Again, he said, the focus was to protect the poor and vulnerable against the impact of “the front-loaded fiscal consolidation under the IMF-supported PC-PEG.”
The minister said the government had also developed a strategy to strengthen the financial sector and rebuild financial institutions’ buffers as one of the policy actions under the DPO.
Improvements
Mr Ofori-Atta said the World Bank had played a critical role in Ghana’s journey to achieve macroeconomic and financial stability as well as setting the economy on a path of strong sustainable growth.
Given the significant sacrifices and strong commitment demonstrated by the government and people of Ghana to ensuring macroeconomic stability and debt sustainability, the minister said the World Bank should leverage Ghana’s example and use it as a demonstration effect by scaling up its support and interventions in the country.
For its part, the government was implementing various revenue reforms and measures targeted at increasing domestic revenue from the current tax to GDP ratio of 13 per cent to between 18 per cent and 20 per cent over the medium term.
Mr Ofori-Atta cited the completion of the domestic debt restructuring three months after the launch of the programme in December 2022; securing financing assurances from the Paris Club Official Creditor Committee (OCC) on May 12, 2022 under the G20 Common Framework and securing the approval of the three-year $3 billion PC-PEG-backed IMF Programme.
Rebound
He observed that there were clear indications that the country was coming out of its economic woes as the economic indicators were beginning to improve.
For instance, Mr Ofori-Atta said the first quarter 2023 growth rebounded to 4.2 per cent, up from three per cent in quarter one of 2022, mainly on the back of 10.1 per cent growth in services and 4.8 per cent growth in agriculture.
Again, he said, inflation had declined to 42.5 per cent in June 2023 after peaking at 54.1 per cent in December 2022.
Mr Ofori-Atta said the cedi had remained relatively stable, depreciating cumulatively by about 22 per cent year-to-date compared to a depreciation of 50 per cent in November 2022. He also said the 91-day treasury bill rate had declined to around 20 per cent, down from 35.5 per cent at the end of 2022.
Climate finance
He stated that the country was focused on taking advantage of the Just Energy Transition Partnerships (JETP) to accelerate its transition to a low carbon economy.
“This would require non-debt financing support to decommission some of our legacy fossil fueled energy installations to make room for more investments in renewable energy,” he said.
He said in terms of enhancing social protection, the 2023 budget had already made specific provisions for doubling the Livelihood Empowerment against Poverty (LEAP) payment per beneficiary household from GH¢45 per month to GH¢90, with a progressive increase in the number of beneficiary households from the current 344,185 households.
“Coverage will be expanded to all 2.5 million extremely poor individuals by 2024.
We plan that by end September 2023, an indexation mechanism will be introduced in the LEAP Programme to prevent erosion of value over time,” he added.
He also said there had been increases in the budgetary allocation for the School Feeding Programme (SFP) to compensate for higher cost of meals and to ensure efficient management of the programme.
The Finance Minister also said more would be done to increase the school capitation grants and further expand the National Health Insurance Scheme (NHIS).
Achieving stability commendable
For her part, Ms Bjerde commended Ghana’s effort to restore macroeconomic stability, comparing the gloom on Ghana’s outlook a year ago and the progress thecountry had made since to get an IMF Board approval for the $3 billion facility.
The performance is seen in the indicators recorded in recent publications and the efforts towards the IMF Board’s review in November.
Ms Bjerde also acknowledged Mr Ofori-Atta’s strong voice in shaping the World Bank evolution, which she said, would continue to be significant to help the course of Ghana and Africa in general.
On Friday, Vice President Mahamudu Bawumia held bilateral talks with a delegation from the World Bank at the Jubilee House in Accra.
In a post on his Facebook page, the Vice President shared that he had received the World Bank Managing Director of Operations, Anna Bjerde, along with the Ghana Country Director, Pierre Laporte, and their team.
During the meeting, the Vice President and the World Bank team engaged in discussions primarily focused on the critical energy sector and the challenges associated with it. He highlighted that the government, through its relevant agencies, is actively working to address these challenges and has developed a comprehensive strategy spanning from immediate to long-term solutions.
The Vice President further noted that the World Bank team commended the government of Ghana for making sound decisions in tackling the country’s challenges. The Bank expressed its commitment to supporting the government in effectively addressing these issues.
In attendance at the meeting were the Energy Minister, the Minister of State at the Finance Ministry, and the Minister of the Interior, all of whom made valuable contributions to the discussions, as per the Vice President’s statement.
Managing Director in charge of World Bank Operations, Ms. Anna Bjerde, has expressed her satisfaction with the progress made in implementing the Ghana Accountability and Learning Outcomes Project (GALOP).
She commended the strong teacher-student engagement, which has resulted in improved reading and comprehension skills among pupils.
Accompanied by a World Bank delegation, Ms. Bjerde visited various projects financed by the Bank, including GALOP. This initiative, supported by the International Development Association (IDA), focuses on seven out of the 28 basic schools in the Weija Gbawe Municipality.
As part of GALOP, teachers have received training in differentiated learning and targeted instruction, which includes teaching reading and numeracy skills to children and developing teaching and learning materials.
Notably, the New Gbawe Municipal Basic School, one of the participating schools, achieved excellent results in the 2021 National Standardized Test for primary four pupils.
Their scores surpassed the national average, with 83 percent in English and 57 percent in Mathematics, compared to the respective national averages of 54 percent and 46 percent.
Ms Bjerde was satisfied with the outcome of the project, saying, “What I saw at the school was very engaging, especially with the teachers and the pupils, and the excellent skills exhibited by the teachers to keep the pupils motivated in learning.”
She stated that building strong human capital was an important ingredient in ensuring sustainable development, adding that promoting technical and vocational training would create job opportunities for the youth.
She said the World Bank would work to scale up the project across the country to improve teaching and learning.
“Going forward, we will ask the teachers if they need any support to improve the implementation of the projects,” she added according to the Ghana News Agency, and urged the government to work on the ratio of teachers to pupils to enable the teachers to fully understand the educational needs of pupils and develop innovative ways to address them.
On his part, Deputy Minister of Education, Reverend John Ntim Fordjour, disclosed that the Ghana Accountability and Learning Outcomes Project (GALOP) has received a total funding of $150 million from the International Development Association (IDA) and $60.7 million from Trust Funds. The funding covers the period from 2019 to 2025.
The primary objective of GALOP is to enhance the quality of education in underperforming basic schools while promoting equity and accountability within the education sector in Ghana.
Rev. Fordjour highlighted that the project has provided support to 10,500 schools nationwide. Additionally, he noted that 81 percent of primary schools benefiting from GALOP now have a pupil-trained-teacher ratio below 50:1. This represents an increase from the baseline of 75 percent in 2019.
The Deputy Minister emphasized that Ghana is committed to transforming its education system and preparing students to meet the learning outcomes of the 21st century. He emphasized the country’s efforts to create a positive learning environment that enables students to thrive in the evolving market space.
Ghana has been receiving support from the World Bank since 1957, and the current active portfolio consists of 21 projects amounting to $3.6 billion. These projects encompass various sectors, including nutrition, education, finance, social protection, jobs, and digital development.
Managing Director for Operations at the World Bank, Anna Bjerde, is scheduled to visit Ghana from July 12-15, 2023.
This visit marks her first trip to Ghana since assuming her role on April 3, 2023. Accompanying her will be Ousmane Diagana, the World Bank Vice President for Western and Central Africa.
During her visit, Anna Bjerde and her delegation will have the honor of meeting with President Nana Akufo-Addo in a courtesy call. Additionally, she will engage in high-level discussions with key government officials, including Vice President Dr. Mahamudu Bawumia and Finance Minister Ken Ofori-Atta.
The discussions will cover crucial aspects of the World Bank’s program in Ghana, such as macroeconomics, energy sector issues, Ghana’s International Monetary Fund program, debt restructuring, and significant structural reforms aimed at promoting sustainable economic growth over the medium to long term.
Anna Bjerde’s itinerary also includes visits to World Bank-funded projects in Ghana. These projects include the Ghana Accountability and Learning Outcomes Project, the Ghana Tech Hub, and the Ghana Innovation Hub located at the Accra Digital Center.
The World Bank has been actively involved with Ghana since 1957. Currently, their portfolio consists of 21 active projects worth $3.6 billion.
These projects span various sectors, with significant investments allocated to Urban Resilience and Land (17%), Health, Nutrition & Population (16%), Finance & Competitiveness (14%), Social Protection & Jobs (12%), and Digital Development (11%).
Former Minister for Food and Agriculture, Dr Owusu Afriyie Akoto, is overwhelmed the World Bank’s decision to provide a $200 million financing from the International Development Association (IDA) for the Ghana Tree Crop Diversification Project (TCDP).
In an interview at his campaign office on Sunday, July 9, 2023, the NPP presidential hopeful noted that the project is very dear to his heart as it seeks diversify and grow its economy through modernizing agriculture to accelerate productivity, resilience, and industrialization.
According to Dr Afriyie Akotio, he took the initiative to engage the World Bank to throw its support behind the project when he still was the Minister for Food and Agriculture.
“As we speak, only US$ 3 million has been disbursed to promote the objectives of the Tree Crop Development Authority. While the slow disbursement of the seed money was going on, I engaged the World Bank to see how best they can assist us. So, they saw my vision that this is something that can easily make Ghana a prosperous country if we just took care of that particular Authority.
So, the engagement went on and I am glad that only a few months that I left office, the World Bank itself has put up a statement that they are prepared to support the Authority with US$200 million. It is just a relief for me,” he noted.
Ghana on June 3, 2023, received approval of $200 million financing from the International Development Association (IDA) for the Ghana Tree Crop Diversification Project (TCDP).
“The World Bank is pleased to support Ghana’s medium-term national development strategy through the Ghana Tree Crop Diversification Project and directly contribute to the Government of Ghana’s priorities for economic and social development in the Coordinated Program of Economic and Social Development Policies, for inclusive, resilient, and sustainable economy,” said Pierre Laporte, World Bank Country Director for Ghana, Liberia, and Sierra Leone.
“The project willsupport private investments in Small and Medium Enterprises (SMEs) in cocoa, cashew, and coconut value chains and in cashew and coconut processing units,” he added.
According to the World Bank, while Ghana’s tree crops sector plays an enormous role in agriculture and the economy, the sector can contribute more substantially to Ghana’s economy and society than it currently does, including job creation, export revenue generation, and poverty reduction of the country’s poorest people.
Cocoa, cashew, coconut, and rubber segments employ some 728,000, 100,000, 10,364, and 4,322 farmers respectively.
Challenges said to be limiting the development of the sector include low and stagnant productivity, weak institutional capacity, poor sector governance, and poor climate resilience due to weak adoption of climate smart agriculture technologies and practices.
There is little value addition and weak coordination between actors of the tree crops value chains, the World Bank asserts, adding that “there is also lack of connectivity between farmers and improved inputs and services providers, and vulnerability to pests and diseases.”
The Government of Ghana intends to diversify and expand the economy by modernising agriculture, accelerating industrialisation, and prioritising climate resilience and mitigation.
This will be done in line with the Investment for Food and Jobs (Medium-Term Development Plan, 2018–2021) and the ‘Ghana Beyond Aid’ reform agenda by implementing the Ghana Tree Crop Diversification Project (GTCDP) through the Tree Crops Development Authority (TCDA) and Ghana Cocoa Board (COCOBOD), collaborating with the World Bank.
The GTCDP, among others, will support the existing capacity of COCOBOD and strengthen the nascent organisational capacity of TCDA. It will provide optimal enabling environments through the legalisation and operationalisation of tree crop regulations and agribusiness policies.
It will also support and enable local farmers, traders, and processors to generate jobs and profits from the production of the four selected tree crops, i.e., cocoa, cashew, rubber and coconut.
Flagbearer hopeful of the New Patriotic Party (NPP), Dr. Owusu Afriyie Akoto, has revealed that he personally approached the World Bank to secure funding for the Tree Crop Development Authority (TCDA). Recognizing the immense potential of the TCDA’s revenue base and its potential to positively impact Ghana’s economy, Dr. Afriyie Akoto took the initiative to seek external financial support.
He explained that his proactive approach was motivated by the slow pace at which the government was disbursing the allocated seed money of $5 million per year for the first three years of the TCDA’s establishment, resulting in a total of $15 million.
However, during the initial three-year period, only $3 million had been disbursed to the Authority, which proved to be insufficient for its operational needs.
The TCDA was established under the Act of Parliament, 2019 (Act 1010), with the mandate to develop and regulate the tree crop sub-sector and address related matters. As part of this mission, the TCDA is driving the Tree Crop Diversification Project (TCDP).
“As we speak, only US$ 3 million has been disbursed to promote the objectives of the Tree Crop Development Authority. While the slow disbursement of the seed money was going on, I engaged the World Bank to see how best they can assist us. So, they saw my vision that this is something that can easily make Ghana a prosperous country if we just took care of that particular Authority. So, the engagement went on and I am glad that only a few months that I left office, the World Bank itself has put up a statement that they are prepared to support the Authority with US$200 million. It is just a relief for me,” he noted.
The combined growth of these six tree crops is projected to earn Ghana between US$ 6 billion to US$12 billion annually after six or seven years of implementation.
The financing of the Tree Crop Diversification Project will further support demand-driven research and enhance on-farm productivity and resilience to improve productivity, profitability, and climate resilience in the cocoa, cashew, coconut, and rubber value chains.
Commenting further on the facility, Dr. Akoto who is a former two-term Member of Parliament (MP) for Kwadaso, lauded the International Development Association for extending the financial support for the Tree Crop Diversification Project.
He expressed the belief that the US$200 million injected into the TCDP would speed up the activities of the TCDA, an action, he underscored, was the surest way to salvage the country’s economic woes.
Dr. Akoto emphasized the significance of agriculture, particularly the tree crop sector, for the economic transformation of Ghana.
Drawing attention to the success of Ivory Coast, he highlighted that the combined annual export earnings from five cash crops including cashew, cocoa, coffee, rubber, and oil palm, amounted to approximately US$8 billion annually.
Dr. Akoto underscored Ghana’s advantageous position compared to Ivory Coast due to its abundant arable land, ample water resources, and favorable rainfall patterns.
Expressing confidence in the impact of the recently secured financing, he stated that the Tree Crop Development Authority’s (TCDA) Board and Management would now be well-equipped to pursue the Authority’s objectives and drive positive economic turnaround in Ghana.
“I am very confident now that with the capable Management and Board of the Authority, they will be able to implement and make this a very unique contribution to the transformation of Ghana and that is the vision I am bringing to the Presidency of Ghana if I am elected first as the flagbearer of the NPP and subsequently as President come 7th December 2024 if the people of Ghana are convinced of this vision, this will be my central contribution in terms of promoting development in Ghana by transforming the economy”, he noted.
He commended farmers in the country for their commitment to feeding Ghanaians, stressing that the smallholder farmers were ready to support the government to turn the economic fortunes of Ghana around using agriculture.
Dr. Akoto also commended the current Minister of Food and Agriculture, Dr. Bryan Acheampong for continuing from where he left over with the introduction of the second phase of the Planting for Food and Jobs (PFJ).
Basic schools in the country have not been neglected by government, according to Dr. Yaw Osei Adutwum, Minister of Education.
He revealed that this was because the government was set to begin the construction of new schools across the country as part of its efforts to eliminate schools under trees and other infrastructural deficits in the country.
The Minister of Education made this statement at the Science, Technology, Engineering, and Mathematics (STEM) Promotion Roadshow in Accra on Thursday.
“In the next few weeks through the World Bank intervention and other development banks’ intervention, a number of new schools are going to be built across the country. Some constructions have begun. So if you are watching us from anywhere in this country understand that we have not neglected our basic schools even as we reform our Senior High Schools,” he stated.
Dr Adutwum further said that the government was making the effort and investment to build newSTEMschools that would be fully-fledged stand-alone schools.
He also said that the government wanted to ensure that art courses were integrated into schools to ensure that the country had well-rounded citizens.
“It is a novel opportunity to bring about transformation of our nation. The Ghanaian child must always be prepared to compete with the rest of the world and win, and it begins and ends with Science, Technology, Engineering, Arts and Mathematics (STEAM) education,” he added.
In order to stabilise the economy, the government has promised that the structural and financial reforms it has planned won’t result in job losses.
TheInternational Monetary Fund has approved the government’s Post-COVID-19 Plan for Economic Growth (PC-PEG), which includes changes to jump-start the economy.
Finance Minister Ken Ofori-Atta said during a press conference on Sunday, June 18, that the reforms are not intended to result in job losses but rather to enhance the economy.
“We expect multilateral support of about US$2.0 billion for 2023 and US$6.2 billion between 2023 and 2026.
We expect the World Bank to provide a total support of US$1.6 billion whilst the AfDB provides a total support of US$200 million over the programme period.
In addition, we expect to mobilize catalytic funding of US$30 million in 2023 and US$330 million between 2023 and 2026 from bilateral creditors.”
“Government intends to invest these resources to advance macroeconomic stability and shared economic growth.
Government is very intentional in ensuring that growth and job creation are not sacrificed in the process of restoring macroeconomic stability and debt sustainability.
Specific interventions to support the economic recovery process include: improving the business environment, reducing the cost of doing business and enhancing export competitiveness,”Mr. Ofori-Atta added.
The Minister further stated that the government is poised to collaborate with its external partners and other government agencies to attract significant private capital to complement its efforts.
“While aggressively mobilising domestic revenue, we remain focused on mobilising complementary sustainable external resources for our recovery and reform efforts to build the resilience that will promote shared prosperity for our people, while protecting and improving the lives of our more vulnerable population.
A special collaborative effort between the Ministry of Finance, Ministry of Trade, Ministry of Agriculture and GIPC will be part of the programme on the thematic working group on growth to attract significant private capital.”
The Ghana Labour Market Information System (GLMIS) is scheduled to be commence operation in September 2023, according to the Ministry of Employment and Labour Relations (MELR).
The US$30 million World Bank-funded advanced technology platform is to serve as a one-stop shop for all labour market information and connect job seekers from both the formal and informal sectors of the economy to employers.
It would provide synchronised data from all State entities as well as private sector organisations on Ghana’s employment situation, including emerging trends, in-demand skills and training opportunities.
The GLMIS would also have accessibility features like text-to-speech, adjustable font sizes and keyboard navigations to enable persons with disabilities to access and utilise the platform.
Ghana’s move is in conformity with the standards of the International Labour Organisation (ILO), which encourages good practice in the development and use of labour market information for human resources development and programme planning and suggests strategies for overcoming the barriers to its use.
Nana Amoako Bonti Kakra Asante, a Management and Information System (MIS) Specialist for the Ghana Jobs and Skills Project at the Ministry, said the system would “allow jobs seekers and employers to trade and market themselves.”
“The whole idea is to make the system a one-stop platform so it will be easier for people who are seeking jobs while informing the government and other entities on policy-making decisions on employment and labour issues,” he said.
Nana Asante said this on Thursday when the Ministry engaged personnel from some media houses in Accra as part of its stakeholder interactions ahead of the official launch of the digital labour market information platform by September.
The engagement was to enlighten and inform the media of the new system to help them in championing the information dissemination process of GLMIS.
On cybersecurity issues, Nana Asante said the Ministry in collaboration with major stakeholders, including the National Information Technology Agency (NITA) and the Data Protection Agency, would secure all biodata and other information of users of the platform.
“We’re making sure that the data subject of those individuals who key in their information will be protected by the principles of the Data Protection Agency,” he assured.
He added that the platform would be scrutinised by officers of the Ministry to ensure that fraudulent persons did not have access to the platform to guarantee the safety of information for job seekers and employers.
Mr Bright Wireku-Brobbey, Deputy Minister, MELR, urged the media to support the Ministry with the dissemination of information about the GLMIS to reach a wider populace.
He said the Ministry would ensure timely implementation of GLMIS in fulfillment of their mandate to provide Ghanaians with information on labour and employment.
“This ground-breaking system represents a significant step towards fostering a more efficient and inclusive job market in Ghana and heralds a new era of connectivity and opportunity, empowering job seekers and employers alike,” the Minister said.
He said he was confident that with the implementation of the Ghana Labour Market Information System, disparities in labour and employment data in the country would be solved and called on all stakeholders to support it.
Effective Monday, June 19, the Livelihood Empowerment Against Poverty (LEAP) program will begin distributing cash awards around the country on behalf of the government through the Ministry of Gender, Children, and Social Protection.
A press release, signed by the Minister of Gender, Children and Social Protection, stated that the grants have been increased by 100% in response to the escalating global socio-economic crisis.
The release outlined the new grant amounts: households with one eligible member will now receive GH₵128, up from GH₵64; households with two eligible members will receive GHS 152 instead of GH₵76; households with three eligible members will receive GH₵176, up from GH₵88; and households with four or more eligible members will now receive GH₵212, compared to the previous GH₵106. These adjustments apply to the 83rd and 84th cycles of the social protection programme, which aims to alleviate poverty by providing bi-monthly cash grants to the most vulnerable households in Ghana. The programme also seeks to improve human capital development and enhance consumption patterns among beneficiaries.
The Minister, Hajia Lariba Zuweira Abudu, highlighted the worsening impact of the global economic crisis on the lives and livelihoods of the poor and vulnerable. The release emphasized the government’s commitment to addressing these challenges and mitigating their effects on the vulnerable population. “As a responsible government, we are taking the necessary steps to resolve the current challenges and as well reduce the effects of the shocks on the poor and vulnerable,” stated the release.
The government has allocated GH₵109,031,160.00 for the 83rd and 84th cycles, enabling the payment of cash grants to approximately 350,000 households. These households encompass over 1.5 million individuals who are beneficiaries of the LEAP Programme.
The amount received by each household depends on the number of eligible individuals within the household, including orphans and vulnerable children, elderly individuals without support, persons with severe disabilities, and extremely poor pregnant women and mothers with infants under one year.
The Ministry urged all stakeholders involved in theLEAPpayment process, including the Department of Social Welfare and Community Development, the LEAP Community Focal Persons, the Payment Service Provider (the Ghana Inter-bank Payment and Settlement Systems), and the Participating Financial Institutions, to ensure the successful distribution of the grants.
The Ministry expressed gratitude to the LEAP Programme’s supporters, including The World Bank, UNICEF, and the World Food Programme, for their valuable assistance.
A recent opinion poll published by the European Parliament on Tuesday, suggests that there has been a notable increase in interest regarding the European elections in recent years.
The survey comes one year ahead of the next European Parliament elections, which are to be held on June 6-9, 2024, when the current five-year term ends.
Some 56% of respondents were interested in the elections and two thirds were likely to vote if the elections were held next week, the survey said.
Both figures are up compared with a similar poll carried out ahead of the previous elections in 2019. Final election turnout in 2019 was at 50.7%.
The higher interest is probably linked to the increased visibility of the EU in recent years due to multiple crises including theCovid-19 pandemic and Russia’s war on Ukraine, European Parliament spokesman Jaume Duch Guillot said.
A recent scandal in which former and sitting lawmakers were charged with corruption and money laundering did not impact the poll’s results, Duch Guillot said.
But 60% of respondents said they were not satisfied with the bloc’s fight against corruption, including 22% who were “not at all satisfied.”
More respondents approved of the EU’s support for Ukraine, with an average of 76% across the bloc. Approval rates however differed between member states.
Survey results were based on interviews with over 26,000 people aged 15 or older from the bloc’s 27 member states.
The European Parliament has fewer powers compared to national ones, as the European Parliament cannot propose laws.
The Country Director of the World Bank in Ghana, Pierre Frank Laporte, has stated that the bank does not believe the funds it provided to the Ghanaian government, amounting to over $430 million, were misappropriated in the fight against COVID-19.
Laporte clarified that the funds provided by the World Bank were managed by a joint project team consisting of World Bank officials and government representatives.
He further emphasized that these funds were separate from the Ghanaian government’s budget.
During an interview with TV3, Laporte highlighted that the dedicated team overseeing the funds ensured their appropriate utilization for their intended purposes.
Payments were made directly to contractors, ensuring transparency and accountability in the disbursement process.
“We have given $430 million to Ghana for Covid. Our project funds have not gone to the budget of the Ministry of Finance, and because of this, we’ve mechanisms in place that ensure we know each and every dollar that is spent and accounted and we’ve done audits.
“Of course, there are always a few things here and, procedure-wise, maybe some documentation that needs to be followed.
“But largely speaking, we are very satisfied that all of our resources were spent in line with the procurement requirements that existed. You know, COVID-19 was implemented under emergency procurement measures by the bank,” he said.
The director said that the money given to the government of Ghana is still being used, adding that the bank was working to make more funds available.
In his most recent address to the nation, President Akufo-Addo for the umpteenth time shot down claims that government leveraged of COVID-19 to undertake corrupt activities.
World Bank (WB) Country Director to Ghana, Pierre Frank Laporte, says Ghana’s energy sector debt is a major contributor to her debt woes.
In an interview monitored by GNA, the country director indicated that his outfit had identified certain factors that were driving the country’s debt situations.
According to Mr Laporte, one of the factors the bank has identified is the energy sector.
He said the deficiencies in the sector characterised by the tariff systems and management issues coupled with expensive power purchases by the state in addition to the transmission losses, were the major problems in the energy sector driving Ghana’s debts.
He said the mismatch between the production cost of the Independent Power Producers (IPPs) vis-à-vis how much consumers paid led to an upsurge of debts since the Government could not make financial commitments to them (IPPs).
Mr Laporte also said the Power Purchasing Agreements (PPAs) the Government had signed were expensive. In addition to the exorbitant power purchases the country was paying for energy it does not use due to the ‘’take or pay contracts.’’
‘’In the case of Ghana, those contracts that have been signed as PPAs are just expensive and the kind of PPAs signed are take or pay. You pay although you do not use it. The fact is that in the past few years, Ghana entered into an agreement at the wrong rate and the wrong price, and it has impacted the debts situation.’’
He asked the Government to pursue some reforms in the areas of tariff adjustments, addressing the transmission losses through improved infrastructure and restructuring the power purchasing agreements consistent with the energy demands of the country to reduce a significant portion of the debts.
The WB Country Director acknowledged the progress made thus far via the recent increment and subsequent approval in tariff by the Public Utility Regulatory Commission (PURC), saying much could be achieved if the intended reforms in the energy sector were implemented.
He subsequently advised the Government to take advantage of the West African Power Poll, to provide cheap electricity for its people and industry.
According to the Fitch Ranks, the energy sector is the biggest driver of the national debt as the West African Country currently owes independent power producers to the tune of $1.58 billion.
Fitch Ranks also says the country had initially reached out to the IPPs to restructure their debts in view of the External and Domestic Debt Restructuring but the companies objected to the proposal.
The World Bank has emphasized the importance of transparency and accountability in the government’s School Feeding Programme.
It has cautioned that financial support for the program may be withdrawn if the necessary reforms to promote transparency and accountability are not implemented.
During an interview on the Business Edition of PM Express, the Country Director of the World Bank, Pierre Frank Laporte, highlighted that this decision aims to ensure that the programme is executed in the appropriate manner.
“We’ve been very clear that in the new project, we expect full transparency and accountability…we are very clear. If government refuses to do school feeding the right way, we will restructure the project and not support that activity,” he told to George Wiafe.
He also said the politicisation of the programme is also a concern for the bank.
The World Bank Country Director added that the Bank does not want its projects to be seen as “political tools.”
“We’ve been talking very directly to both the Finance Ministry and the Ministry of Local Government on the School Feeding Programme. Because we know School Feeding Programme can get very political. There can be favours and stuff like that,” he said.
The social intervention programme which started in 2005 seeks to enhance food security and reduce hunger in line with the UN Millennium Development Goals on hunger, poverty, and malnutrition but has been plagued with funding challenges.
Some caterers are currently engaged in a strike due to unpaid grants, and they have declared that they will not cook for school children until they receive the owed funds.
They are determined not to be swayed by mere promises this time. In the midst of this, the World Bank Country Director for Ghana has stated that if an agreement is reached on the conditionality, Ghana is likely to receive the initial installment of $300 million from the World Bank.
The government must present a robust reform package in order for the World Bank to release this $300 million facility, which is intended to provide budget support.
This first tranche is part of a $1.1 billion facility extended by the World Bank to Ghana over a four-year period, aimed at supporting the country’s budget while it is under the IMF program.
Pierre Laporte, the Country Director, mentioned that if an agreement is reached, the first installment of the funds is expected to be deposited into Ghana’s accounts by September of this year.
“Our plan, our hope is we can bring this to the board by September. But it will all depend on how fast we reach an agreement with government on the pro-actions.
“It may be September, it may be October, but we’re hoping we need to do it this year because IMF has factored it into its financing gap,” he said on Thursday.
The World Bank is urging the government to reconsider some of the Power Purchase Agreements (PPAs) signed as part of the International Monetary Fund (IMF) bailout to help the economy recover.
According to the bank, many of the PPAs that the government signed with Independent Power Producers (IPPs) are expensive.
The Country Director of the World Bank with responsibilities over Ghana, Sierra Leone and Liberia explained that many of the country’s PPAs signed for power generation are very expensive and wrong.
Mr Pierre Frank Laporte made the call for the review of PPAs on Accra-based Joy FM’s 6:00 am news on Friday, June 2, 2023.
He said the kind of PPAs Ghana signed means the country is paying more for power generation when it is not supposed to be so.
“The fact is Ghana entered into some PPAs that were wrong. These types, in our view, were at the wrong rate and at the wrong prices,” he said. “And today the country is being billed for many of these wrong PPAs.”
He said there is a need for the government to restructure some of these contracts.
“I know that the government has started some talks with the IPPs to renegotiate some of these PPAs,” he said.
Africa’s debt sustainability outlook remains uncertain due to low growth and high inflation, according to World Bank economist Andrew Dabalen.
One of his main concerns was the possibility of stagflation taking hold. According to a World Bank assessment, nearly half of the countries in Sub-Saharan Africa are in debt distress or are at high risk of becoming so.
“We don’t expect the number to grow beyond what we have now,” Dabalen said in an interview with Reuters.
He cautioned that changing global economic conditions continued to present risks to that outlook.
Dabalen said the Common Framework debt restructuring negotiations for Zambia “keep dragging on” and that the process should be equitable for all creditors.
According to him, several countries are taking the necessary steps to implement reforms that would better serve their long-term objectives.
Aside from these domestic reforms would always be superior to those imposed on them by international funders, he added.
He said a significant number of countries on the continent are in the unique position of having the mineral resources necessary for a low-carbon future.
The World Bank has granted government with an additional $150 million in finance to strengthen flood risk management and solid waste management for over 2.5 million people in the Odaw River Basin of the Greater Accra Region.
In a press release copied to Ghana Business News, the World Bank said the Greater Accra Region accounts for over 40 percent of non-oil GDP and faces increased flood risks that may reduce the economic and social development potential of the country.
The Bank indicated that urban floods have become more frequent and of higher intensity due to fast-growing development and occupation of flood risk areas, inadequate and unmaintained drainage systems, and solid waste accumulation along waterways.
The flood event of June 3, 2015, affected 53,000 people and caused major damage and losses in the housing, transport, water, and sanitation sectors amounting to $55 million, with an estimated $105 million reconstruction cost. At the time, the GARID project – a dedicated programme of interventions – was designed to address these challenges, it said.
Pierre Laporte, the World Bank Country Director for Ghana, Liberia, and Sierra Leone, said: “The World Bank is happy to support Ghana in these times of macroeconomic challenges and to help contribute to a holistic flood management approach through this additional financing of GARID. This is critical to achieving the World Bank’s twin goals of ending extreme poverty and boosting shared prosperity, as well as increasing the resilience of African cities.
“This additional support fills a financing gap resulting from the triggering of the Contingency Emergency Response Component (CERC) in 2020 due to the COVID-19 pandemic and the inclusion of resettlement compensation for approximately 2,800 project affected persons. It also addresses cost overruns for major infrastructure investments due to inflation and engineering requirements,” he said.
The Bank states that the project will continue to prioritize investments that enhance resilience to flood risks and improve solid waste management systems in targeted communities of the Odaw River Basin area.
“The planned flood mitigation infrastructure investments under GARID will directly reduce the flooding risks for urbanizing and economically productive areas of the Greater Accra Region, limiting the direct flood hazards on more than 138,000 people” said Catherine Lynch, Senior Urban Specialist and Task Team Leader for GARID project.
Standard Bank Group’s 160-year history in Africa makes the Group more than a financial services organization. The Group has become a core and an indispensable member of the African community, offering not just integrated financial services and superior value, but also supporting the continent in varied and distinct ways.
In all the years that the bank has been in operation, we have been guided by the creed that Africa is our beating heart, and we are committed to creating shared value for our clients, our people, and society to help our continent realise its potential as part of the global economy.
Our vision to become the leading financial services organisation in Africa, delivering exceptional client experiences and superior value has found expression in our work on the continent over the years. Through the ever-changing expectations and needs of clients and businesses on the continent, Standard Bank has remained resolute in being the bank that continuously drives Africa’s growth.
Our obligation has been to help our clients navigate the diverse African landscape to realise their dreams through our reach, deep insight and expertise about Africa, and innovative thinking. We are a critical catalyst for economic change in all countries where we operate.
This lies at the core of our purpose to develop commercially sound ways to address the environmental and social challenges experienced in our countries of operation, thereby accelerating economic growth, human development and making a better life for all Africans.
Our purpose for driving Africa’s growth also means courting the right investments that provide the continent the impetus for growth. The bank has been consistent in working with multinationals seeking to make inroads in Africa to develop strategies, based on our expertise and experience on the continent, that make it easier for them to operate effectively on the continent. We believe we can make meaningful, positive impact on Africa’s growth by partnering with institutions that share this commitment.
This year’s theme for the AU Day celebration, ‘Accelerating the Implementation of the AfCFTA’ brings into sharp focus what we at the Standard Bank Group have always acknowledged and supported.
In our 160 years of existence, the Standard Bank Group has been driven by a desire to see Africa grow. That is why we say Africa is our home and we drive her growth. In linking up the continent for trade, the African Continental Free Trade Area (AfCFTA) Agreement presents an opportunity to grow Africa’s economy.
For decades, Africa has been characterized by fragmented markets that inhibit the acceleration of economic growth of countries on the continent. Available statistics show that Africa trades 85 per cent with the rest of the world and only 15 percent within.
The introduction of the African Continental Free Trade Area (AfCFTA) is a long-awaited intervention that promises to defragment the continent and boost the productivity of its economies.
When fully ratified by all African countries, the AfCFTA will become the largest free trade area by membership established under World Trade Organization (WTO) rules integrating 55 African economies.
The AfCFTA, will establish a single continental market for goods and services, facilitated by movement of capital and persons. Immediately, 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at US$3.4 trillion (World Bank, 2020) will be connected.
Beyond its ground-breaking size, the AfCFTA promises to be a paradigm shift and a deeper commitment to the integration of the continent by negotiating goods and services simultaneously.
The agreement is a potential economic game-changer for Africa’s development not only because of its potential to enhance intra-African trade but also to provide an opportunity for countries in the region to competitively integrate into the global economy, reduce poverty, and promote inclusion.
Many analysts are of the opinion that increasing trade through the AfCFTA will provide the impetus for reforms that activates productivity and job creation, thereby decreasing the incidence of poverty on the continent.
Indeed, the World Bank suggests that by 2035, implementing the agreement could help to lift an additional 30 million people from extreme poverty and 68 million people from moderate poverty.
It is estimated that implementing the AfCFTA will increase the volume of intra-African trade by 81% by 2035, and increase the volume of total African exports by 29% (World Bank, 2020).
By boosting intra-African trade and fostering regional value chains and production networks, the AfCFTA is expected to drive Africa’s structural transformation. Under the AfCFTA, Africa’s people, including entrepreneurs, professionals, workers and consumers, will be able to move across the continent, allowing them and the businesses they represent, to take advantage of opportunities to trade goods and services.
What remains critical, however, is the agility of entrepreneurs and business people to recognize these vast opportunities and take advantage of them thereof.
As the AfCFTA beckons, business people and entrepreneurs must position themselves strategically to leverage the opportunities provided by the agreement. As a starting point, entrepreneurs must arm themselves with as much information as possible about the agreement to be able to navigate through the nuances of the agreement.
Beyond learning about the agreement, value addition must be a preoccupation of businesses if the AfCFTA would be of any benefit to them. Value addition comes with capacity building that enables African businesses to progress from local players to regional players. The business community must adopt modern operations and business strategies and systems to ensure competitiveness.
The Bank has played a central role in the development of African economies for over a century and half. We have done this by constantly aligning our presence in the market-place with the evolving needs of the region’s economies – and by delivering relevant banking and financial services.
When we say Africa is our home and we drive her growth, it is not mere rhetoric. It is a belief by which we live and conduct our business. Our presence in 20 African countries and our unique value to Ghanaian and African companies planning to export to other countries on the continent coupled with our understanding of the local markets and our expertise in international trade, give us the opportunity to help facilitate the operationalization of the AfCFTA.
As we mark AU Day, Stanbic Bank would like to remind all Ghanaians that the dream of a Ghana with capable men and women managing the affairs of the country to achieve prosperity for all its people is still very possible.
By Farihan Alhassan Head, Business and Commercial Banking -Stanbic Bank
DISCLAIMER: Independentghana.com will not be liable for any inaccuracies contained in this article. The views expressed in the article are solely those of the author’s, and do not reflect those of The Independent Ghana.
The deputy CEO of operations at the Tree Crop Development Authority (TCDA), Foster Boateng, has announced that the World Bank has provided a US$100 million facility to increase production and enhance the value chains of cashew, coconut, and rubber.
The facility is a partnership with government under a six-year funding initiative known as the Tree Crop Diversification Project.
Speaking to B&FT at the maiden Ghana Africa Sustainable Commodities Initiative National Platform Meeting in Accra, Mr. Boateng said a portion of the money will be used by the TCDA to improve institutions and build systems within the tree crop sector; and build capacity of value chain actors such as the Cashew Council, Federation of Association of Ghanaian Exporters (FAGE), Coconut Federation and the Rubber Associations.
Also, part of the money will be used to tackle environmental issues, child labour and address key requirements of global buyers, developmental partners and governments.
The TCDA will also use a percentage of the funds to build and manage a digitisation platform that enables the Authority to register and track value chain actors to boost regulation and resource mobilisation.
“A chunk of the money will be utilised to support the Cocoa Research Institute in conducting research into cashew production; and the Oil Palm Research Institute, Crop Research Institute among others, including capacity building for farmer-based organisations,” Mr. Boateng said.
The National Platform Facilitator for the Africa Sustainable Commodities Initiative (ASCI), Afua Serwah-Prempeh – who facilitated the meeting, said the original intention for the platform was to focus on sustainable production of oil palm.
“After CoP 27 in Egypt, we have sought to expand the platform’s scope to include other relevant commodities and tree crops. This meeting is basically held to discuss and decide which commodities to include in the new agenda, and how the platform will be funded,” she said.
Key resolutions of the meeting include the agreement to give relevance to commodities that significantly contribute to afforestation, and a revision of national principles to reflect new commodities which are essential to the TCDA.
In an effort to put women- and youth-led micro, small, and medium-sized enterprise (MSMEs) at the forefront of the nation’s economic recovery efforts, the Ghana Enterprises Agency (GEA) has launched two new interventions.
The interventions – dubbed ‘Women MSME’ and ‘Youth MSME’ – are the result of close collaborations between GEA, the Ministries of Trade and Industry and Finance and the World Bank. The programmes will be implemented under the Ghana Economic Transformation Project (GETP).
Over GH¢30million and about GH¢60million have been earmarked for the women and youth MSME programmes respectively.
Even though MSMEs account for 92 percent of all registered businesses in the country, and contribute roughly 70 percent of Ghana’s gross domestic product, data from the Office of Registrar of Companies show just 44 percent of these MSMEs are owned by women entrepreneurs’ vis-à-vis the sex ratio of 49 percent to 51 percent female to male population as of 2021.
Also, young people between the ages of 19-35 make up the largest population segment in the country – about 11.7million; making up 38.2 percent of the total population of almost 31 million people, hence the introduction of these women and youth-focused exclusive technical assistance and grant funding programmes as part of government’s initiatives to promote and accelerate investments in high-growth MSMEs with promising prospects of scaling-up to become job creators.
Transformative initiatives
The Minister of Trade and Industry, K.T. Hammond – who launched the programmes in Accra, described the initiatives as “worthy, timely and ultimately strategic and transformative”.
With such support, he said, the GEA with support from government and the ministry will successfully lead the creation of a significant pool of modern, globally competitive and sustainable high-growth MSMEs that drive and sustain economic growth and development.
“We are committed to continue leveraging funding and development assistance to address the challenges of access to finance,” he stated, noting that the launch is in line with the ministry’s efforts at achieving ‘development of SMEs’ – which is part of the ten-point pillars of government’s industrial transformation agenda.
The agenda seeks to give small- and medium-scale businesses the needed boost to survive and impact government’s objective of job creation.
Citing the 2021 Population and Housing Census – which suggests that the age structure of country’s population may be transitioning from one dominated by children (0-14 years) into a population dominated by young people aged between 15 and 35 years, Mr. Hammond said: “This reinforces the urgency needed to join forces with the private sector and development partners so as to fully implement Ghana’s MSME and Entrepreneurship Development Policy and enhance the creation of jobs for this population”.
He commended the GEA for taking up a commanding lead in implementing strategic projects and funding schemes for MSMEs nationwide, especially in respect of women and the youth.
“We expect GEA to continue its excellent performance in the use of digital platforms and provide comprehensive support through its extensive network of business development service providers. We also expect this to be done with the special duty of care necessary to safeguard long-term interests of the businesses,” he stated.
The future is women and youth
The Chief Executive Officer (CEO) of GEA, Kosi Yankey Ayeh, on her part said the newly launched programmes will redefine government’s focus toward women- and youth-led MSMEs, because “the future is women and the youth”.
“So it’s very important that we do a whole lot more to support female and youth-led MSMEs in Ghana…but not because we don’t see a high number of them apply for our interventions; the challenge we see is that they are applying for less amounts of money and the capacity to reach and exceed and move to the next level is being challenged. So, in order to be able to do more and do better – in partnership with the World Bank, the Ministries of Trade and Industry and Finance, we thought it best to develop new interventions that will transform these businesses,” she stated.
The Executive Directors of the World Bank today selected Ajay Banga as President of the World Bank for a five-year term beginning June 2, 2023.
Ajay Banga most recently served as Vice Chairman at General Atlantic. Previously, he was President and CEO of Mastercard, a global organization with nearly 24,000 employees.
Under his leadership, MasterCard launched the Center for Inclusive Growth, which advances equitable and sustainable economic growth and financial inclusion around the world. He was Honorary Chairman of the International Chamber of Commerce, serving as Chairman from 2020-2022.
He became an advisor to General Atlantic’s climate-focused fund, BeyondNetZero, at its inception in 2021. Banga served as Co-Chair of the Partnership for Central America, a coalition of private organizations that works to advance economic opportunity across underserved populations in El Salvador, Guatemala, and Honduras.
He was previously on the Boards of the American Red Cross, Kraft Foods, and Dow Inc.
Ajay Banga is a co-founder of The Cyber Readiness Institute and was Vice Chair of the Economic Club of New York.
He was awarded the Foreign Policy Association Medal in 2012, the Padma Shri Award by the President of India in 2016, the Ellis Island Medal of Honor and the Business Council for International Understanding’s Global Leadership Award in 2019, and the Distinguished Friends of Singapore Public Service Star in 2021.
The Executive Directors followed the selection process agreed by shareholders in 2011. The process included an open, merit-based, and transparent nomination where any national of the Bank’s membership could be proposed by any Executive Director or Governor through an Executive Director.
This was then followed by thorough due diligence and a comprehensive interview of Mr. Banga by the Executive Directors.
The Board looks forward to working with Mr. Banga on the World Bank Group Evolution process, as discussed at the April 2023 Spring Meetings, and on all the World Bank Group’s ambitions and efforts aimed at tackling the toughest development challenges facing developing countries.
The President of the World Bank Group is also the Chair of the Board of the Executive Directors of the International Bank for Reconstruction and Development (IBRD).
The President is also ex officio chair of the Board of Directors of the International Development Association (IDA), International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and of the Administrative Council of the International Centre for Settlement of Investment Disputes (ICSID).
Member of Parliament for Ningo-Prampram, Sam Nartey George, has called on the government to explain how its agenda – Ghana Beyond Aid – remains relevant amid support initiatives from international bodies.
Mr Nartey expressed his concerns in Parliament on Tuesday when the House reconvened to approve some loan agreements.
Among the seven loan agreements approved was $200 million loan agreement with the World Bank geared towards financing the Ghana Digital Acceleration Project.
Reacting to the initiative, the Ningo-Prampram MP said: “Mr Speaker, reading the committee’s report, I am interested to see how they say that this loan is consistent with Ghana Beyond Aid. We are taking a loan from the World Bank as part of Ghana Beyond Aid; I am trying to understand the rationale behind it.”
He also stated that the government needs to come clear with regards to the $43 million loan facility which seeks to ensure exclusive and safe digital transformation.
“Mr Speaker, it is also important that, when you look at component 1, is a 43 million US dollars facility for ensuring exclusive and safe digital transformation.
“Mr Speaker, currently we are all dealing with SIM card registration and our bio data being used by people we don’t know. We need to know how this 43 million Dollars is going to be used to protect the bio-data and strengthen the data protection commission.”
The breakdown down of the loan agreements indicate that $60.6 million will be allocated to the Ghana Covid-19 Emergency Preparedness and Response Project, $150 million for the West Africa Food Systems Resilience Programme received.
An amount of €170 million has been allocated for establishment of the Development Bank of Ghana (DBG).
In addition, $30 million was allocated to support the Covid-19-related Medical Equipment Provision Project, $150 million went toward the Primary Healthcare Investment Project, and $150 million was allocated to the Public Financial Management for Service Delivery Programme.
Parliament has approved seven loan agreements worth $710 million during an emergency business meeting on Tuesday, May 2, 2023.
Currently, information on where the majority of the funding is coming from is yet to be made public.
The breakdown of the loan agreements indicate that $60.6 million will be allocated to the Ghana Covid-19 Emergency Preparedness and Response Project and $150 million for the West Africa Food Systems Resilience Programme.
An amount of €170 million has been allocated for establishment of the Development Bank of Ghana (DBG).
In addition, $30 million was allocated to support the Covid-19-related Medical Equipment Provision Project, $150 million went toward the Primary Healthcare Investment Project, and $150 million was allocated to the Public Financial Management for Service Delivery Programme.
The House also approved a $200 million loan agreement with the World Bank geared towards financing the Ghana Digital Acceleration Project.
The project is to help government increase access to broadband, enhance the efficiency and quality of selected digital public services, and strengthen the digital innovation ecosystem in Ghana to help create better jobs and economic opportunities.
The approved Ghana Digital Acceleration Project will support a regulatory shift to create an enabling environment for digital inclusion and innovation; streamline governance and delivery of public services; and facilitate smallholder engagement in data-driven digital agriculture.
It is unknown the intricacies of the loan agreements, however, it is expected that these loans will add up to Ghana’s already worrying debt stock.
Meanwhile, Ghana is still at the door of the International Monetary Fund (IMF) making frantic efforts to secure a $3 billion bailout as the country’s economy faces an unprecedented crisis.
Earlier this week, President Akufo-Addo asked Japan to help Ghana secure a deal with the IMF.
He said this at a meeting with the Japanese Prime Minister, Fumio Kishida
The Asian country is the latest of the tall list of countries Ghana is calling on for needed assistance.
President Akufo-Addo said the bailout will boost the recovery of Ghana’s economy.
“Ghana is also counting on the support of Japan in reaching a favourable agreement with the International Monetary Fund which will pave the way for the robust recovery of Ghana’s economy,” President Akufo-Addo told Fumio Kishida.
The Economist Intelligence Unit predicts that Ghana’s GDP would grow by 1.3% in 2023, which will cause a substantial slowdown.
This falls short of the World Bank’s and the IMF’s predictions of 1.8% and 1.6%, respectively.
The UK-based group predicts that real GDP growth will decline in 2023 due to the impact that rising prices and monetary tightening will have on private consumption and investment.
Government spending would thereafter decrease.
According to its 2023 Country Report on Ghana, growth will be moderate in 2024 as tightness continues, but it will quicken up in 2025–2027 as new projects come online, driving an increase in gold and oil export revenues.
“Growth will slow to 1.3% in 2023, as a cost-of-living squeeze, public spending cuts and monetary tightening by the BoG will cause domestic demand to contract for the first time since 2014. Reduced consumption and sustained cedi depreciation will, however, help to boost net exports, the sole growth driver in 2023 and the main factor behind our growth forecast of 2.3% for 2024″, it added.
Further, EIU said macroeconomic instability and a public debt crisis will weigh on Ghana’s business environment and its ambitions to become a West African trading hub.
A weak regional regulatory environment, poor transport links and low foreign trade, except in commodities, will also hamper progress.
Continuing, the EIU said it expects the government to remain committed to fiscal consolidation in 2023-27 in a bid to bring the public finances and debt back onto a sustainable path, underpinned by an International Monetary Fund programme.
The 2023 budget includes measures to both widen the tax net and extend spending cuts.
In line with EIU expectations, in mid-April 2023, President Akufo-Addo assented to three new revenue-raising bills: the Income Tax Amendment Bill, the Excise Duty Amendment Bill and the Growth and Sustainability Amendment Bill.
It added that the bills will boost revenue over the forecast period, helping to shrink the fiscal deficit to 7.1% of GDP in 2023 (from an estimated 8.3% of GDP in 2022) and steadily to 4.4% of GDP in 2027.
It stressed that “despite revenue mobilisation measures in the 2023 budget including the reintroduction of road tolls, a 2.5-percentage-point rise in the value-added tax (VAT) rate, to 15%, and an increase in excise duties, a slowing economy will keep revenue/GDP ratio below potential in 2023″.
However, it concluded that the quickening economic growth will push up the ratio in 2024-27, adding “increasing administrative efficiency under IMF guidance will also boost revenue in 2023-27, as will an increase in the trade tax take in 2025-27, driven by rising gold and oil output”.
Ghana’s President Nana Addo Dankwa Akufo-Addo has made a passionate request to the International Monetary Fund and the World Bank for concessionary loans to help the country’s struggling economy.
According to him, the loan facility is critical to the private sector which has been negatively impacted by the current economic challenges.
Making remarks following a visit from the Director General of the World Trade Organization, Dr Ngozi Okonjo-Iweala to Ghana, president Akufo-Addo said the concessionary loans could be granted on more favourable terms compared to what the borrower could obtain in the marketplace.
He explained that the terms could also be based on a lower interest rate or deferred repayments.
President Akufo-Addo on his part shared that the current challenges in the economy have made it difficult for Ghana to gain access to the international capital markets for borrowing hence the decision to seek IMF assistance.
Meanwhile, the WTO Director-General, Ngozi Okonjo-Iweala in remarks noted that struggling countries in Africa for instance, must begin to readjust their economic infrastructure to address their challenges.
“But we are also urging at the WTO that we do something we call re-globalisation, that we use this opportunity, if we want to build resilience in certain global supply chains to look at others, other developing countries as possible places where manufacturing can also take place,” Dr Okonjo-Iweala said.
“I think these are some of the things that Ghana should consider, Ghana is a much-loved country and I think that your ability to attract investment should be something very important for you to talk to several of these global supply chains to see if they can also consider Ghana as a possible destination,” the WTO boss advised.
The World Bank has set aside $372 million as a guarantee payment for Ghana after it missed its coupon payment on the 2030 Eurobond.
This comes after Government of Ghana on April 14, 2023 defaulted on making the coupon payment after it declared a debt moratorium back in December 2022.
In view of this, the International Development Association (IDA) of the World Bank has since made the $372 million guarantee payment on behalf of the Government of Ghana on April 20, 2023.
Back in 2015, Ghana engaged the World Bank for financial support following a wave of economic challenges and market conditions particularly on the Eurobond markets. The country at the time lacked access to the international capital markets and was saddled with high debts.
The Ministry of Finance earlier requested a policy-based guarantee and a credit from the IDA to raise the necessary funds to repay upcoming debt.
The International Development Association of the World Bank then provided a policy-based guarantee, which allowed Ghana to issue a $1 billion Eurobond series due in 2030. The guarantee was meant to cover up to $400 million in both principal and interest payments.
According to Finance Ministry, the funds were used to re-finance the country’s existing debt which was nearing unprecedented levels.
Meanwhile, the government of Ghana later bought back and cancelled $70 million of the 2030 Eurobond, thereby reducing the guarantee payment amount to $372 million.
However, the funds raised through the Eurobond issuance helped Ghana to refinance its existing debt at a lower interest rate of 10.75 percent.
The country was also able to extend the maturity of its debt to an average of 15 years, up from 90 days to two years.
As a result of the current socio-economic challenges in the country, the Ministry of Finance on December 19, 2022, declared a moratorium on certain categories of its external debt, including Eurobonds.
This comes after Ghana reached a Staff-Level agreement with the IMF for an economic bailout programme of $3 billion.
Ghana then launched the Domestic Debt Exchange Programme to restructure its debt as well as request for debt treatment under the G20 Common Framework.
The Ghana Investment Promotion Centre (GIPC) is collaborating with the World Bank to develop an Investor Grievance Mechanism (IGM) for the early detection of challenges and dispute redress.
Mr. Edward Ashong-Lartey, GIPC’s Director of Investor Services disclosed this at the second edition of its Ministries Department Agencies (MDA) – Investor Forum.
The event sought to advance deliberations on how to improve the relationship between state institutions and businesses within the country.
This was in recognition of the impact of MDAs/Metropolitan, Municipal, and District Assemblies (MMDAs) on the investment infrastructure landscape, particularly the streamlining of permits and licenses, the provision of infrastructure and utilities, and the support of local economic development.
Mr Ashong-Lartey said the MDA would have a vital role to play in the IGM and so must work collectively to eliminate bureaucratic bottlenecks to help investors “transform risks into opportunities”.
GIPC’s Head of Aftercare, Ms. Victoria Cobbah said MDAs/MMDAs could bolster the investment landscape by streamlining regulations, simplifying administrative procedures, and addressing business challenges at the local level.
Ms. Diana Afriyie Addo, the Head of Business Regulatory Reforms at the Ministry of Trade and Industries highlighted ongoing business regulatory reforms in Ghana aimed at improving the overall ease of doing business in the country.
She sensitised the gathering on her outfit’s online platform which gives information on all business regulations and bye-laws.
She also urged investors to leverage the platform, which also allows them to contribute to ongoing deliberations on regulatory reforms.
According to the Minister for Finance, Ken Ofori-Atta, the World Bank has committed $250 million to Ghana Financial Stability Fund (GSFS).
While engaging the press in Washington DC, the minister noted that the said amount would hit the country’s account by the third quarter.
“The World Bank has committed $250 million,” he is quoted to have said by JoyNews.
He explained that the stability fund is being established to ensure that government can intervene in the event of any solvency and liquidity issues.
The Finance Minister noted that currently, talks are underway for donor partners such as the African Development Bank for further resources into the fund.
He added that government will also deposit some money into the fund, and further encouraged other multilateral development banks and bilateral partners to assist the Government of Ghana to secure the stability of the country’s financial sector.
The Ministry of Finance in collaboration with the World Bank, Bank of Ghana, and other financial institutions, has launched the National Financial Education Campaign Programme.
The main aim of the program is to strengthen Ghanaians’ financial capabilities and promote responsible financial behaviours since the current development in the country’s economic and financial sector, underlines the need for a more timely and all-inclusive financial education program which lectures the noticeable problems in the financial sector.
The event saw the congregation of industry players in the financial sector which included representatives from the World Bank, Bank of Ghana, Securities and Exchange Commission, National Pensions Regulatory Authority, National Insurance Commission, and the Ghana Microfinance Institutions Network.
A Deputy Finance Minister, Madam Abena Osei-Asare, in her keynote address commended the World Bank for their continuous support to the development of the Ghanaian economy and, for sponsoring the design and roll-out of the National Financial Education Campaign.
She revealed that, many Ghanaians lacked the basic understanding of key financial issues such as the impact of inflation on the value of their money, computation of interest on loans and investments, awareness and use of financial products and services among other things. This, she noted had made it difficult for them to make any informed financial decision.
“Indeed, financial capability of consumers is a major component to building a strong and resilient economy. Without this, many people will resort to the old and unsecured ways of handling monies, such as keeping monies under pillows and mattresses,” she said.
The structure of the financial education campaign allows for radio and TV discussions, public fora, townhall engagements, and social media campaign. Different educational materials have been developed and translated from English into eleven (11) local languages, namely, Ga, Akwapim Twi, Asante Twi, Ewe, Sefwi, Nzema, Dagomba, Dagaare, Kusaal, Mamprugu and Gonja.
The Deputy Minister who is also the Member of Parliament for Atiwa East further stated that, despite the major impact of global pandemic shocks and the domestic debt exchange programme, the Ghanaian financial sector remained resilient, and that the Monetary Policy Committee, in its most recent release, alluded to the banking industry’s relative stability despite recording some losses from the Domestic Debt Exchange Program (DDEP).
She urged the media to take deliberate steps to evaluate products being advertised by financial institutions before advertising these products. She added that, people were highly influenced by financial products and services advertised on radio and television.
The Director of the Financial Sector Division of the Ministry, Mr. Sampson Akligoh, welcoming participants on behalf of the Chief Director of the Ministry of Finance, Dr. Patrick Nomo noted that, the campaign was designed through a collaborative effort by financial sector regulators and industry associations.
He stated that, some financial institutions were not licensed to provide financial services to the public and but were operating illegally in the country.
This, he regretted had resulted in loss of monies (deposits and investments) of many households and business as these institutions bolted with the monies of their depositors and investors.
“To prevent a full-blown financial crisis, the Government through the financial sector regulators between 2017 and 2019 embarked on a comprehensive reform agenda with the aim of ridding the financial sector off illegal, illiquid and insolvent financial institutions as well as to strengthen the regulatory and supervisory framework of the sector”, Dr Nomo said.
He concluded by urging the general public to ensure the financial institutions they wished to work with, were duly licenced and working under regulatory bodies.
Giving an overview of the financial literacy campaign, the chairperson of the Financial Education Multi-Stakeholder Committee (FEMCOM), Mrs. Patience Arko Boham, disclosed that, Asamoah and Williams Consulting and Trans Media Network, was procured to assist in the design and implementation of a five-year national financial literacy strategy (2021-2025) to serve as a blueprint for bolstering the financial capacity of Ghanaians.
“It is important to mention that throughout the process, the World Bank played a pivotal role by providing technical assistance to the team and providing insights from other country experiences to ensure the design of a campaign that will create lasting impact on Ghanaians” she added.
There were solidarity messages from stakeholders including the Bank of Ghana, Securities and Exchange Commission and National Insurance Commission.
The Campaign is scheduled to be conducted in all the sixteen (16) regions of Ghana and predominantly target the informal sector and youth groups.
Ghana’s projection to secure an Executive Board approval from the International Monetary Fund (IMF) for its $3 billion loan-support programme by the end of the second quarter of 2023 is likely to happen.
This is because Ghana’s largest bilateral creditor, China, which the country owes $1.7 billion, has agreed to speed up processes for its debt treatment.
“China [and all creditors] has agreed that it [debt treatment] has to be speedily dispensed. That is a great step forward because once you recognise that you have to do it in time and at the earliest, it moves faster. So, I expect a resolution for these countries,” Nirmala Sitharaman, Finance Minister, Republic of India said.
She was speaking at a press briefing of the Group of 20 Presidency’s (G20) second Finance Ministers and Central Bank Governors (FMCBG) at the ongoing 2023 IMF/World Bank Group (WBG) Spring Meetings in Washington DC, US.
“We had around the table, Sri Lanka, Zambia, Ghana, Chad [which] has already been attended to, and Ethiopia. So, discussions were to ensure that the resolutions for these countries should happen on time. All stakeholders in this matter should come on board to talk,” she said.
She added that: “The point is that it [debt treatment] is very time-consuming and even when the IMF says it is handling your affair, it does take time, and we found that almost all of them, inclusive of public and private creditors, of them, said it must be addressed at the earliest time.”
During an investor presentation on the sidelines of the spring meetings, Ghana’s Finance Minister, Ken Ofori-Atta, said the Government is expecting an IMF Executive Board engagement and approval in the second quarter of 2023.
The Government is having preliminary and technical discussions with Bondholders Committee Advisors and Bilateral Creditors Secretariat and Technical Teams – as well as Bilateral and Private Creditors – which are expected to conclude by the end of April, to gain financial assurances for the $3bn loan-support programme.
“The restructuring of the external debt is necessary to restore debt sustainability and ensure the full financing of the programme,” Mr Ofori-Atta said.
He emphasised that Ghana’s creditor engagement strategy would be anchored on transparency, good faith efforts for a collaborative process to restore debt sustainability, fair treatment across creditors -consistent with IMF debt sustainability analysis.
Already, the IMF, World Bank Group and the Group of 20 Presidency (G20), have all pledged to increase concessional financing to Ghana to address the country’s current debt challenges.
“Work will be undertaken on principles regarding cut-off dates, formal debt service suspension at the beginning of the process, treatment of arrears, and perimeter of debt to be restructured, including domestic debt [for Ghana and other developing countries],” Kristalina Georgieva, Managing Director, IMF said on Wednesday.
Ghanaian authorities in December last year, reached a Staff-Level Agreement with the IMF, and currently awaiting the Fund’s Executive Board approval for the three-tier $3 billion loan-support programme under the Extended Credit Facility (ECF).
The country completed its Domestic Debt Exchange Programme (DDEP) and engaging its external creditors for debt operations for the loan facility, which is aimed at restoring macroeconomic stability, while protecting vulnerable.
Currently, some officials from Ghana, including Members of Parliament (MPs) and Members of the Economic Management team, are with the Finance Minister and the Governor of the Bank of Ghana, at the ongoing IMF/World Bank Spring Meetings to engage commercial, bilateral, and multilateral creditors to secure the IMF Board approval.
The Ministry of Finance has said that the sector minister Minister Ken Ofori-Atta has had very productive meetings so far at the #SpringMeeting2023 with the International Monetary Fund (IMF), International Finance Corporation (IFC) and Japan International Cooperation Agency (JICA), among others.
“Grateful for the strong cooperation from our bilateral and multilateral partners!<” the Office of the Finance Minister tweeted on Wednesday, April 12.
The 2023 Spring Meetings of the Fund and the World Bank Group commenced on Monday, April 10 and are expected to end on Sunday, April 16 in Washington DC.
The theme for the programme of events is “Reshaping Development for a New Era”.
At the heart of the meetings is a discussion around the progress of the institutions.
The meeting brings together central bankers, ministers of finance and development, parliamentarians, private sector executives, representatives from civil society organizations and academics to discuss issues of global concern, including the world economic outlook, poverty eradication, economic development, and aid effectiveness.
China and the World Bank are exploring compromises over how to restructure billions of dollars of debt held by poor nations, seeking a long-sought breakthrough that could unlock desperately needed aid.
Discussions on Wednesday, April 12, 2023, in Washington, during the World Bank and International Monetary Fund’s Spring Meetings, are aimed at ending a deadlock among the world’s biggest creditor nations on how to renegotiate several poorer nations’ debt, which had become unsustainable amid surging inflation and a stronger dollar.
A proposal under discussion this week would see the World Bank provide fresh low-interest loans — known as concessional lending — and other grants to countries on the verge of default, in exchange for China dropping a key demand and agreeing on a timeline for debt relief. The talks were described by people familiar with the matter, who asked not to be identified because the discussions are private and the outcome is still uncertain.
Key to the compromise is the World Bank increasing its emergency assistance to countries in debt distress, something its outgoing president, David Malpass, said on Tuesday that the lender was already intending to do.
Officials from a number of countries cautioned, however, that a major breakthrough is unlikely this week, that China’s position remains unclear and the discussions are focused largely on the overall process.
People’s Bank of China governor Yi Gang is the highest-level official expected from Beijing to attend the talks this week, along with Deputy Governor Xuan Changneng, according to a person familiar with the matter. Finance Minister Liu Kun didn’t travel to Washington, with Beijing opting to send Vice Minister Wang Dongwei instead, said a second person.
The World Bank and US Treasury Department declined to comment, while the PBOC and IMF didn’t immediately respond to requests for comment.
The Wall Street Journal reported earlier on Tuesday on the possible compromise in the talks. Reuters reported late on Tuesday that China would drop its demand on multilateral loans, citing a source it didn’t identify.
The debt-relief efforts, begun by the G20 in late 2020, were intended as a way to coordinate traditional creditor nations, like the US and France, with emerging creditors, particularly China, the biggest lender to emerging economies.
Yet that mechanism, known as the Common Framework, has faced repeated delays over differences about how to treat various forms of debt. Beijing has been pushing for loans from multilateral development banks, such as the World Bank, to be treated the same as other debt — meaning everyone takes a similar “haircut”, or loss, on what’s owed.
That condition has been rejected by the US and others, who argue that such a move would harm multilateral banks’ preferred creditor status, which allows them to borrow and lend cheaply.
Debt distress
More than 70 low-income nations face a collective $326-billion burden. About 15% of low-income countries are already in debt distress and another 45% face high debt vulnerabilities, and the list is growing.
Among the compromises under discussion is a three-month deadline from when the IMF reaches a staff-level agreement with a debtor country for creditors to offer financing assurances, said two of the people. Such assurances are essential for the IMF’s board to sign off on any loans.
If consensus isn’t reached in that time frame, the IMF would be able to invoke its so-called lending into official arrears policy to disburse money. That provision seeks to prevent a creditor from blocking assistance to a cash-strapped country that’s shown commitment to meet loan conditions.
To help the Common Framework process work more smoothly going forward, Malpass said this week that the IMF and World Bank also might provide their joint debt sustainability analysis for debtors with all creditors at the same time, increasing transparency. China had earlier raised questions about the institutions’ analysis, further slowing the efforts to reach a consensus.
A breakthrough in talks this week could open the way for restructurings in nations including Zambia — the first African nation to default on its debt during the pandemic era — and help speed up the deployment of billions of dollars in IMF aid. The African country has been in talks to rework $12.8-billion in loans for more than two years.
The International Monetary Fund (IMF) has doubled down on its plea to wealthier nations to support Ghana and other weaker economies to help such countries extricate themselves from the shackles of debt.
The call also comes at a time when the fund has seen a $1. 6 billion shortfalls in its funding in the face of the seemingly global economic crises where funding to debt-distressed countries was at its highest.
Speaking ahead of the IMF and World Bank Spring Meetings in Washington, Kristalina Georgieva, the
IMF’s Managing Director said the fund and wealthier countries needed to make it easier for vulnerable ones to restructure their debts to help minimise the effects of the debt crises on lives and livelihoods of their people.
Developed economies must also commit more resources to the fund’s Poverty Reduction and Growth Trust (PRGT) – a concessionary lending window for low-income countries (LICs) – to help strengthen the global response to debt vulnerabilities, Ms Georgieva said in a curtain raiser speech before the meetings that opened yesterday, Monday, April 10.
Ghana’s case
The one-week meetings in Washington D.C. in the United States of America (USA) come off at a time when Low-Income Countries (LICs) are battling extreme debt pressures worsened by the COVID-19 pandemic and Russia’s invasion of Ukraine. Ghana, with a debt stock of GH$575.7 billion in November last year, is one of more than 10 LICs in debt distress.
The country defaulted in servicing its debt last year and is now working with bilateral creditors to restructure their component to be able to earn a US$3 billion IMF assistance to help slow down inflation, prop up the currency and return the economy to the path of growth.
Although discussions with some bilateral creditors under the G20 Common Framework are underway, talks with China, which holds US$1.9 billion of Ghana’s debts have dragged, fuelling doubts over the country’s ability to secure a package before May.
Costly delays
The IMF MD said such delays to debt restructuring requests were costly to the countries and the global economy in general, hence the need for additional support from wealthier countries for these “weakest members of our global family.”
“I wish to make a double plea on their behalf: help them to handle the burden of their debts, which has been made so much harder by the shocks of the past years; and secondly, help ensure that the IMF continues to be in a position to support them in the years ahead. Start with debt”, she pleaded.
About 15 per cent of low-income countries are already in debt distress and another 45 per cent face high debt vulnerabilities. And about a quarter of emerging economies are at high risk and facing “default-like” borrowing spreads.
This has raised concerns over a potential wave of debt restructuring requests—and how to handle them at a time when current restructuring cases are facing costly delays, Zambia being the most recent example,” she said.
Zambia started its debt restructuring in December 2022 but the inability to reach a consensus with China largely means that the process is yet to be concluded.
Stronger support
Beyond this, Ms Georgieva said the IMF needed more resources from wealthier nations “to bolster the IMF’s capacity to help our poorest member countries.”
“To support them, we have increased our interest-free lending more than four-fold to US$24 billion since the beginning of the pandemic. Now, we are urgently calling on our wealthier members to help address fundraising shortfalls in our PRGT,” she said.
In April 2020, the fund disbursed US$1 billion to Ghana under its Rapid Credit Facility (RCF) of the PRGT to fight the COVID-19 pandemic and its effects.
It said earlier this year that increased demand by countries hit by the twin effects of the pandemic and the war in Ukraine meant that the PRGT faced funding shortly of about US$1.6 billion.
As a result, Ms Georgieva said support from wealthier nations was critical to ensure that the IMF can continue to provide vital support and help catalyse financing from others.
“It is now more important than ever to step up cooperation—to strengthen the ropes that tie us together—on this issue and the full range of economic challenges, we face. Only then can we climb these hills together.
Growth
The IMF MD said global growth was also headed for the weakest since 1990.
She said as the debt pressures surged, the growth prospects remained subdued with the fund’s latest estimates showing that the global economy would grow below three per cent in the next five years.
“This makes it even harder to reduce poverty, heal the economic scars of the COVID-19 crisis and provide new and better opportunities for all,” Ms Georgieva said.
For countries like Ghana and Ethiopia, which have a higher inflation differential, growth recovery in 2023 would be accompanied by rising inflation, the World Bank has said in its April 2023 the African Pulse report.
“In those countries, the rising cost of living is already weighing on consumers and investors and may hamper economic growth”.
The report said amid high inflation and weak growth prospects in 2023, the fear of stagflation is rising across some countries in the region.
The report noted that Sub-Sahara African economies as well as the global economy are experiencing an episode of high inflation that is driven by the COVID-19-related lockdowns and supply chain disruptions, and exacerbated by the war in Ukraine, among other factors.
The war in Ukraine, it pointed out, escalated supply chain disruptions further and intensified volatility in energy and commodity prices.
Many central banks across the globe responded by tightening their monetary policies to curb inflation.
For example, the US Federal Reserve has increased its monetary policy rate by 450 basis points since March 17, 2022.
However, inflation declined slowly to 6.4 per cent by January 2023—a rate that is still above the Fed’s 2 per cent inflation target.
The slow disinflationary process can be attributed not only to remaining supply chain issues but also rising wages and higher consumer savings from government stimulus checks.
Further interest rate hikes to curb inflation add more pressure to tighten global financial conditions and elevate the risk of a global economic slowdown, the report indicated.
It said one of the salient features in the current inflationary episode is the increase in food prices— which had started prior to the pandemic—due to pent-up demand as the global economy lifted COVID-19 restrictions and harsh weather conditions.
Many Sub-Sahara African countries have experienced high headline inflation fueled primarily by food inflation.
Nearly three-quarters of the countries in the region with available data for January 2023 recorded a two-digit year-over-year rate of food inflation—with Zimbabwe (264 per cent), Sudan (58.7 per cent), and Ghana (61 per cent) exhibiting the highest rates.
It noted that rising inflation erodes purchasing power, holds back growth, and, if not addressed, leads the government to run the risk of de-anchoring inflationary expectations—with dire consequences for financial markets.
“Many countries have also accumulated mounting debt burdens since the pre-pandemic era. In this context, what are the risks of stagflation in Sub-Sahara African countries, and what are the policies needed to engage in a sustainable growth path with a stable macroeconomic environment?”
“It considers countries at risk of stagflation as those that meet two criteria: (1) their income per capita in 2023 is still below that of 2019 (prior to the pandemic), and (2) the projected average inflation rate in 2023 is higher than the corresponding rate for advanced economies”.
The report said evidence shows that about 38 per cent of Sub-Saharan African countries have a greater risk of stagflation.
“Many countries in this group have also recorded two-digit unemployment rates—particularly Southern African countries, Angola, and Nigeria, among others”.
Countries with a low inflation deviation from advanced countries (say, less than 0.025) show moderate to robust growth under a relatively stable inflationary environment.