The average Ghanaian does not need an economics degree to know the economy is going through a very rough patch. They feel it on their commute to work and when shopping for foodstuffs. As of August 2023, Ghana faces an extremely challenging economic outlook with high inflation exceeding 40%. This is largely driven by rising food prices, putting a significant strain on household budgets as reported by the World Bank. Ghana’s current economic situation presents a complex picture when considering the cost of living and poverty rates.
Based on a World Bank survey poverty is projected to worsen between now and 2025, increasing to nearly 34% by 2025, consistent with a muted outlook on growth in services and agriculture and rising prices which are outpacing the income growth of those at the bottom of the distribution. Despite considerable inflation in the country, its minimum wage has only increased by 10% – insufficient given the pace of inflation.
In an article published on Statista by Doris Dokua Sasu, around 2.99 million people in Ghana lived in extreme poverty, the majority in rural areas in 2023. The count of people living on less than 1.90 U.S. dollars a day in rural regions reached around 2.8 million, while 214,000 extremely poor people were located in urban areas. Overall, within the period examined, the poverty incidence remained above two million in rural communities and between 200 and 350 thousand in urban areas.
Many low-income households now spend more than half of their earnings on food. In trotros (public transport), passengers and drivers’ mates fight over sudden jumps in fare rates. The Kenkey Index, a project tracking the change in price and size of kenkey (dumplings), a carbohydrate-heavy go-to staple, found that the prices were increasing as the sizes got smaller. The most common price now is 4 cedis ($0.34), up from 3 cedis (0.26) a year ago.
According to the Ghana Statistical Service, four of five public sector employees earn less than 3,000 Ghanaian cedis ($260) a month. An online survey (skewed towards college-educated single men under 35) conducted by financial analyst Jerome Kuseh also found that more than half of respondents made less than 5,000 cedis a month ($440). At least half of those surveyed had less than 10,000 cedis ($860) as their total life savings. Kuseh told Aljazeera that Ghana’s safety net consists of an underfunded health insurance scheme and free senior high school education, and although these social programmes are necessary, they are inadequate to tackle the recurrent economic crises that result in a sharp increase in the cost of living every few years.
In a 7-page document titled “Bank of Ghana [BOG] has failed us”, released on Friday, January 5, by Togbe Afede, the paramount chief of Asogli state, he expressed his views on the economic woes of Ghana. Togbe Afede, expressed his concerns about various aspects of Ghana’s economy, including high inflation rates, currency depreciation, excessive debt, and poor infrastructure despite substantial debt accumulation. He accused the BOG of mismanaging monetary policy, leading to detrimental effects on the economy, such as high-interest rates, inflation, and currency depreciation. He argued that BOG’s policies have hindered economic growth, increased import dependence, and perpetuated foreign domination of the economy. He noted that many Ghanaian youth are desperate to flee the country due to lack of opportunities in our potentially rich but poor country. He called for a reevaluation of BOG’s mandate and a monetary policy focused on growth and employment.
Article by
Richard Nyarko
He is a passionate geographer with a strong interest in poverty alleviation. He leverages his spatial understanding to advocate for solutions that address global challenges. He is a beneficiary of YAFO Institute’s Working in Web3 project and actively participates in the Cardano network, a blockchain community. He brings over 2 years of experience as a warehouse officer, ensuring a detail-oriented and efficient approach to his endeavors.
