Economy is growing…But where is the money?
As Ghana statistically continues to register impressive economic growth, majority of the citizens are starting to question the dividends of the growth, as more companies continue to lay-off workers and strategize, citing ‘harsh economic times’.
A recent survey by Business Day Research Team, on how citizens in Ghana feel about the state of their country, showed widespread discontent with the economy and corruption.
“Even when the economy was growing at a faster clip, the job market just wasn’t responding. It has always been tough for Ghana’s jobs market,” Johnson Mensah, a Human Resource Expert, with a decade experience told Business Day.
Slightly over half of the respondents said they are dissatisfied with the country’s direction and the national economy.
A seasoned Banker, Eva Frimpong-Ntim remarked: “There is no money in the system. Financial institutions are struggling to get deposits. Where is the money hiding?”
The general feeling of discontent comes amidst positive economic projections by the government and international institutions such as World Bank and International Monetary Fund (IMF).
Ghana is tipped to lead Africa as the fastest growing economy in 2018 with a growth rate of eight per cent as a result of increased oil and gas production. In its latest report dubbed: “Global Economic Prospects: Sub-Saharan Africa,” the World Bank forecasted that growth in Sub-Saharan Africa will pick up at 3.2 percent in 2018, and Ghana will lead the economies in Africa with eight per cent.
Ghana’s economic growth, which had slowed from 4.0% in 2014 to 3.7% in 2015, recovered to 5.8% in 2016 and 8.7% in 2017, following consolidation of macroeconomic stability and implementation of measures to resolve the crippling power crisis.
There has been sustained growth in Gross Domestic Product (GDP) and the whole world is excited about Ghana. Indeed the International Monetary Fund (IMF) considers Ghana as one of the fastest growing economies in the world today.
While the numbers look good at the top level, the beneficiaries of the growth – ordinary Ghanaians and businesses – have a different perspective. Underlying all of that rosy posturing is a canker that is steadily eating away at the innards of the country’s economy.
Anyone who has been reading the business pages of our local newspapers over the last few years or been listening to the business programmes on the main FM stations, must be aware of the very difficult circumstances in which many of our manufacturing companies have been operating.
This situation is quite ironic, given that the macroeconomic policies that the government has been pursuing over the last few years, have shown positive results; a sustained drop in inflation to single digit, a relatively stable currency against the major trading currencies and an improved budget deficit position.
Last year, for instance, Ecobank Ghana has disengaged 181 outsourced staff as it continues to expand on its digital agenda which seeks to place banking in the hands of its clients. The staff, including front and back office branch executives and other departments spread across the country were asked to go home. The move culminated in the reduction of its branches across the country from 77 to 67 to ensure efficiency is high, and serve customers better.
In 2016, Fidelity Bank also sacked at least 190 of its staff as part of ongoing staff rationalisation and restructuring within the bank. The economic growth during that time was 5.8 per cent.
The year 2015 is on record as one of the most challenging years on many fronts in Ghana. The volatility experienced on global commodity and currency markets, coupled with Ghana’s macroeconomic headwinds and three consecutive years of an energy crisis had a material adverse impact on business. Approximately 5,000 jobs were believed to have been lost in 2015 alone due to the energy challenges that bedeviled the country.
In the last three years, more manufacturing firms have either closed shop or moved operations to other countries, citing high operational costs, cheap imports or strategic realignment. Industries like the Textiles, Aluminum, Printing, and some Fast Moving Consumer Goods are under immense pressure.
According to Senior Portfolio Manager at Sanlaam Investment Limited, Kevin Kiprono, consumers are currently facing challenging times from several factors which affect their cost of living including government elbowing out the private sector in terms of access to credit.
He says the ballooning government wage bill and other infrastructure expenditures results to crowding out of the private sector as investors and lenders prefer government securities as their investment option.
“This in effect results to a slowdown in business expansion and interferes with normal operations (that includes insufficient cash) flows to pay suppliers,” he noted.
Some businesses nonetheless have sought alternative methods of raising capital which comes at a premium passing the cost to consumers through higher prices of goods and services.
“This challenging environment is expected to continue unless we experience great recovery in major sectors or government optimizes expenditure to income generating projects,” he added.
By John Kelly
