In a latest Ghana Economic Update report titled “Price Surge: Unraveling Inflation’s Toll on Poverty and Food Security,” launched in Accra on Wednesday, the World Bank has expressed concern about the impact of rising prices of goods and services on the well-being of Ghanaians. The report indicates that approximately 850,000 Ghanaians were driven into poverty in 2022 due to these inflationary pressures.
The Bank highlights that the escalating inflation has not only eroded living standards but also exacerbated poverty and food insecurity among households in Ghana. To address this pressing issue, the World Bank recommends that policymakers take decisive action to restore economic stability. They also suggest measures to alleviate the challenges faced by farmers, such as the high cost of fertilizers, and to expand social intervention programs that offer support to vulnerable populations.
Additionally, the Bretton Wood Institution emphasizes the importance of focusing on long-term solutions, particularly investments in agriculture research and technology transfers. These targeted investments aim to boost domestic production, reduce production costs, and enhance the quality and safety of food in the country.
Mr. Paul Corral, a Senior Economist with the World Bank, elaborated on the bank’s approach, stating that they utilized monetary indicators to measure annual household income and expenditure. The findings revealed that inflation has significantly contributed to the rise in poverty levels in Ghana, affecting a substantial number of people.
Addressing these challenges requires concerted efforts from policymakers and stakeholders to protect the welfare of the Ghanaian population and foster economic stability in the country.
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.
The World Bank’s Senior Agricultural Economist, Mr. Ashwini Sebastian, asked for assistance for farmers so they can respond to market possibilities and adjust to global demand.
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 depends on the government putting structural changes into place to address the underlying causes of the economic crisis, accelerate economic growth, and increase economic resilience through the nation’s US$3 billion 17th financial bailout program 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.