“This is the worst economic crisis I have known”

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Makola market in Accra on March 26, 2022.

Makola is just a shadow of himself. The bustle that still reigned six months ago in the main market of Accra has died down. We no longer crowd the arteries once saturated with passersby and goods. Ghana’s capital is suffocating: inflation surpassed 40% in October and the cedi has lost half its value against the dollar, and is now one of the continent’s worst-performing currencies. The prices of housing, water, electricity and gas have risen by almost 70%, those of transport and fuel by 46% – a first in twenty years. “We only move on our feet, we hardly eat”summarizes a seller of loincloths in the market.

Read also: In Ghana, traders are closing shops to denounce record inflation

Because the crisis is deep. Ghana’s national debt now exceeds 100% of GDP and debt service eats up half of the state’s revenue. The country, according to its finance minister, Ken Ofori-Atta, is “at high risk of over-indebtedness”, while foreign exchange reserves have melted from $9.7 billion at the end of 2021 to $6.6 billion in September. The government of Nana Akufo-Addo, who again boasted last year a « Ghana beyond aid » (Ghana beyond aid), therefore had to swallow his pride in July and enlist the help of the International Monetary Fund (IMF), from which he hopes to secure a $3 billion loan.

An IMF delegation was sent to Accra in early December and Ghana launched a domestic debt exchange this week, planning to restructure its debt to pave the way for a bailout by the Washington institution. Thinking that private creditors will suffer significant losses, Moody’s has just downgraded Ghana’s credit rating by two levels to “Ca », the desk’s penultimate note. Or at the same level as Sri Lanka, which is already in default.

One meal a day

In the popular district of Kokomlemle, in the center of the capital, Martin Wiafa runs a grocery store where he resells the basic necessities of life. on the wholesale market. The 60-year-old merchant is formally: “This is the worst economic crisis I have known. What I bought 3 cedis on the market half a year ago now costs doublehe said. To reduce my costs I had to stop using public transport, and to free up a small margin I in turn increased prices. »

Read also: Ghana’s financial collapse is as sad as it is alarming

His wife pulls us into the back room to show off her decimated inventory. The freezer, which usually contains “70 or 80 chickens at once”, is only filled with ice cubes. Meat has become too expensive, customers can no longer keep up. The Wiafa couple no longer use it themselves, or once a week when business is good. The rest of the time he is content with cereals, tubers and salted fish. In order to continue to feed their four children, they only eat one meal a day.

The government did not put a cap on the price of food products, but agreed to raise the minimum wage

Unlike its Ivorian neighbour, the liberal government in Accra has not set a maximum price for consumer food. But he agreed to increase the minimum wage by 10% and introduce a cost of living allowance equal to 15% of the same minimum wage, the amount of which will increase to 14.88 cedis per day (1.08 euros ) into 1is January. That’s less than a bowl of yams and fried fish bought from a street stall.

“we are exhausted”, summarizes Amadou Tijani, who runs a small clothing store in a container in Kokomlemle. “People don’t have enough to eat already, do you think they’ll buy me T-shirts? I used to be the one who supported my distant relatives. Today I have to ask them for mobile money transfers to survive. it’s humiliating”, complains the seller, who had to fire his two employees. Before the crisis, he earned between 1,000 and 2,000 cedi a week, he says, compared to barely 200 today (less than 15 euros). As for saving, you better forget it: since the cedi has plummeted, you have to spend the money you barely earned, as if it burns your fingers.

“White Elephants”

“There are no national data yet, but we can already guess from some indicators that the poverty rate has skyrocketed,” acknowledges economist Peter Quartey, director of the Institute for Statistical, Social and Economic Research (Isser) at the University of Ghana. According to the most recent data (2018), 24.2% of the national population was already living below the poverty line. “Inequality is also increasing, continues Professor Quartey. In any case, this is the pattern that repeats itself in every inflationary crisis: the poor get poorer while the rich maintain their standard of living year after year. »

In the mouths of the authorities, the same refrain returns, terrifying: the crisis is global, the fault lies first with the Covid-19 pandemic, then with the Russo-Ukrainian war. The Ghanaians know that. But they also know that their country, once presented as the good student of West African economies, is one of the most affected in the world.

Recognizing the urgency, the state is seeking austerity measures on government members’ salaries and their operating expenses, with a moratorium on car purchases and non-essential travel, and a pledge to freeze the hiring of civil servants. To halt the devaluation of the cedi, the Central Bank of Ghana (BoG) raised its key rate to 24.5% in October. On the other hand, no cuts are planned for the Akufo-Addo government’s “white elephants”, projects that are as costly as they are disproportionate, such as Ghana’s National Cathedral commissioned by star architect David Adjaye for an estimated budget of 345 millions of euros.

Read also: Ghana wants to trade its gold for oil

Accra now seems willing to do anything to recover capital. Even to consider bartering, exchanging its gold for oil with the United Arab Emirates, in an effort to replenish its foreign exchange reserves. After the government asked the big mining companies in late November to sell 20% of the metal they refine to the BoG to build reserves of bars, the government has just reached an agreement ” provisional “ with the Dubai-based oil company Emirates National Oil Company (ENOC) to import fuel.

Tear gas

Some border towns have also returned to barter. Such as Wuru, a small disadvantaged community of 3,000 in Upper Western Ghana, which also uses the CFA franc, as the currency of nearby Burkina Faso has proven to be more reliable than the local currency. Also on the eastern flank of the country: in Aflao, the gateway to Togo, traders now prefer the CFA franc to the cedi. As for the eco, the single currency project of ECOWAS, its launch has been postponed to 2027.

« What this crisis has revealed to us is total incompetence in the management of our public finances,” sums up Mathieu Fosu, art dealer in Accra for twenty years. Formerly loyal to the presidential party, Mr. Fosu voted for Nana Akufo-Addo’s re-election in 2020. Today he regrets it. “We kept him in power with a simple promise, which was to improve our standard of living. And he did not keep this promise. It’s even worse than before! If the president has any conscience, he should resign, and Ken Ofori-Atta with him. » Among the illustrations he exhibits, the merchant offered portraits of Nana Akufo-Addo. Not anymore, he explains: not only are these no longer sold, but some customers were furious when they saw his face on the wall.

On several occasions in recent months, hundreds of protesters have demonstrated to protest the high cost of living

The high cost of living has inflamed discontent in a population already heated by the #FixTheCountry movement. Born on Twitter, he took to the streets of Accra last year to protest the country’s governance and recurring corruption scandals. On several occasions in recent months, hundreds of protesters marched in the capital to protest the high cost of living, receiving no response from the government other than flashballs or tear gas and serial arrests.

Read also: In Ghana, the delicate case of Aisha Huang, Chinese “queen” of clandestine gold mining

The pinnacle of disillusionment was reached on November 14, when renowned investigative journalist Anas Aremeyaw Anas unveiled a new documentary about the « Galamsey economics », illegal gold mining endemic to Ghana. The Secretary of State for Finance, Charles Adu Boahen, is filmed there on a hidden camera proposing to pseudo-investors – in reality Ghanaian journalists – to use his influence to secure a meeting with the Vice President for a hefty commission of $200,000. . The documentary caused a lot of protest and President Akufo-Addo fired Charles Adu Boahen on the spot. But the damage had already been done.

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