COVID-19: Ghana needs $1bn to hold the economy in shape

A former Executive Director of Standard Chartered Bank, Alex K. Mould, has indicated that, the country needs not less than US$1.0 billion to hold the economy in shape amidst the devastating impact of the global pandemic, COVID-19.

He said, there is a very short window of opportunity now if the government is to creatively manage this public health crisis while concurrently reducing its impact on the economy, and plan for a quick bounce back.

President Nana Akufo-Addo in his address to unionised groups, last week, stated that government was not considering a lockdown currently because of the implications, it will have on many people and the economy at large.

“If you lockdown Accra, what are the consequences? If we lockdown the country, what are the consequences? A responsible government is required to look at all this before decisions are made and that is the exercise on which we are currently engaged”, the president said when he met members of the Ghana Union of Traders Association (GUTA) leadership.

But, Mr Mould noted the President was fully aware of the dire consequence lockdown will impact the economy that is he is being careful declaring a lockdown.

“I will reiterate that we have to learn fast from other countries handling COVID-19 and  adapt what has worked to slow down the its spread to suit our environment in Ghana”, the former GNPC Boss stated in article shared with the public.

He, however, outlined some possible way out to sustain the economy.

Read below his full article:

COVID-19GH: GOVERNMENT NEEDS $1Bn TO PUT ECONOMY IN  A HOLDING PATTERN – ALEX MOULD

There is a very short window of opportunity now if we are to creatively manage this public health crisis while concurrently reducing its impact on the economy, and plan for a quick bounce back.

I will reiterate that we have to learn fast from other countries handling COVID-19 and  adapt what has worked to slow down the its spread to suit our environment in Ghana.

We are told President Nana Akufo-Addo stated government was not considering a lockdown currently because of the implications it will have on many people and the economy at large.

But why not?

Well, his stance was attributed to a meeting he had with the leadership of the Trade Union Congress in Accra yesterday.

And he has been quoted to have argued “If you lockdown Accra, what are the consequences? If we lockdown the country, what are the consequences? A responsible government is required to look at all this before decisions are made and that is the exercise on which we are currently engaged.”

The above comment indicates that the President is fully aware of the implications of both mitigation and suppression strategies in addressing the COVID-19GH; yet he has chosen the mitigation route for reasons only known to him!

Watching as things have unfolded in more affected countries and the daily increase in the number of those affected in Ghana, many of us have pushed for a mandatory lockdown alongside current recommendations by the authorities. Especially, considering the fact that our healthcare system is not advanced enough to accommodate massive numbers of infected cases; all the while continuing to meet the health needs of the Ghanaian populace.

There is no doubt that our hospitals will certainly be overwhelmed and medical practitioners will be unable to cope.

A lockdown will in effect slow down the spread of the virus i.e. reduce the number of people each confirmed case infects and subsequent mortality rates; as well as ultimately avert a crisis.

To do this, the question has been – Do we as a nation have the ability to successfully exist in a lockdown and manage the economic, operational, and even psychological impact of such a measure? Can our infrastructure, economy, and general way of life manage the restrictive measures we have seen play out around the world?

Economically, we are already seeing a gradual slow down as more people take time off work, reduce their daily spending, and children remain home from school. This reality may be masked by the quick surge in panic buying and stocking up we experienced in the past weeks as Ghanaians braced for the full impact of COVID-19; but the economic impact will start to be more apparent as things level off, and people stay home with increased cases.

The current strategy of managing the crisis in Ghana will very likely lead to an emergency lockdown – causing the impact on our economy to be even more disruptively abrupt than in other nations with higher usage rates of e-commerce and more advanced supply chain channels for existence. Should the economy shut down suddenly, small businesses will experience challenges in avoiding payment defaults on bank loans and overdraft payments, paying salaries, an increase in non-performing loans will be observed in the banking sector, a plunge in consumer spending – which powers a bulk of our economy, and we can expect abysmally performance of the stock market.

Success in managing the economy during this time will be measured on how many SMEs and even large corporations avoid going under in Ghana and more importantly, how many Ghanaians will have jobs to return to eventually?

There are great opportunities to harness, and if executed effectively, will ensure a robust recovery with positive effects post-COVID-19. To do this, government will have to quickly decide on spending relative to our GDP and available funding – Ghana’s economy is a $60Bn economy (unlike the US’s $22Tn) may result in a spend of about US$1bn which is about 1.5% of our GDP. The spending government puts in place has a main function of preserving the economy’s ability to bounce back, while fighting the virus and supporting our healthcare frontline. Bank of Ghana will also need to cut interest rates to unprecedented levels and cannot avoid an intervention with the full power of its balance sheets to maintain our functional credit mark. Banks will have to freeze repayment of interest and principal on loans.

Overall we expect to see the creative engagement of activities such as:

• Establish partnerships to quickly drive capacity to improve in-country logistics and supply chain mediums for food and essential items
• Employ the use of the Buffer Stock Company, as well as other privately owned silos and warehouses, to enhance storage and supply (Fund farmers and agriculture landscape to buy and store feed, produce, and essentials in these storage facilities)
• Review possible fiscal measures i.e. suspension of port fees, government levies, and taxes on all food-related imports
•   Plan exportation-industry strategy post-Covid19 – as the global economy awakens and demand begins to rise, Ghana should be able to respond
• Ensure we have a robust economic preservation package to raise the probability for businesses and employees to survive and tide-over the near-term from our already slowly hibernating economy

We are certain that the economy cannot be revived until this public health issue is resolved. Emergent and mandatory shutdowns are unavoidable now as the opportunity to control the Covid-19 outbreak has been lost in Ghana.

We therefore have to handle this challenge promptly and creatively, so that we not only protect and save Ghanaians lives, but also ensure our economy is able to withstand and bounce back quickly in support of the Ghanaian people.

Source: Adnan Adams Mohammed