Global Financial Crisis Surface In Ghana

By theghanaianjournal
By theghanaianjournal

2/27/2009 12:08:12 PM -

Currently, Ghana is an economy that is being held together with bailing wire and glue, strangled in a madman’s race to see what kills it first, corporate food and medical nightmares or the ever increasing march to global financial war.

A sign of a Third World country is that its systems don’t work well because the government is for sale. When you can bribe anyone in the government to get what you want, regardless of the death and suffering that it causes to the population, that is a sign of very deep sickness in the nation. No society that allows a high level of organic corruption, of the outright buying of votes in its parliament or congress, will function well. That is why so many African and other Third World nations are failed states.

The Ghanaian Journal, watched and asked people of Ghana the impact of the financial crisis, which in ordinary knowledge might seem far away, in the lands of the developed but unknowingly creeping slowly in our folds.

Indeed our politicians seem to paint a different picture to us, making us think that we are insulated from the problems that has to be told, for us to brace ourselves towards it. True, not much has been heard from Africa about the impact of the global financial crisis that has sent markets tumbling, banks collapsing and homeowners fearing foreclosure. But there is concern on the world’s poorest continent that the financial fever and fallout will be contagious.

Downtown Accra, the busy noisy capital of Ghana, many residents may not fully follow the complexities of the recent financial turmoil on Wall Street and beyond. But the Ghanaians are no strangers to the word “crisis.” They face a crisis of survival daily. Remember in 2001 when a government handed over to a new government, the words that resonated most was HIPC, Highly Indebted Poor Country and the call for all Ghanaians to ‘tighten their belt’ for harder times ahead. What is the situation today? With the Inflation going up, Bank of Ghana’s Prime up to 18.5% (affecting lending rate) and other economic hit back, what is expected of this new government. Is it another ‘fasting’?

Back in Accra, as night falls, street vendors desperately try to offload a few more items before the close of business. Many are too busy to talk.

But Aaron Mensah was keen to share his views about the impact of the global financial crisis on Africa.

“I saw one … an interview of one director of one bank here in Ghana,” Mensah says. “He said the financial crisis would not affect the bank here in Ghana — in Africa in general. But … I know very well that this will affect Africa, this will affect Ghana in general. For sure … this will affect people like me — people who are here downtown selling things in order to go back to their home and feed their families.”

Maria Koomson, 26, a business woman who trades on the streets of Accra. She said she had been following news of the growing financial mess on BBC, since less is talked about in Accra — then burst out with a litany of complaints about her immediate concern: the high cost of living in Ghana, especially in the regional capitals.

“What isn’t expensive here in Ghana? When every government takes over, instead of things going down we find prices escalating and then they tell us the economy is broke. Life is tough,” says Koomson, who has a 5-year-old son. She says fish is expensive; rice, too — even salt. “Everything has gone up in price in the market. Plus school fees, transport — you name it. Everything is expensive, yet no one has a proper job. We just can’t afford to feed our families or send our children to school anymore. Every single day is a struggle.”

Koomson’s concerns are mirrored all over Africa. She may not have a bank account, a mortgage, or stocks and shares, but that does not diminish her worries about trying to make ends meet. Crucial remittances are already down from Africans working abroad. They keep many families back home afloat.

The big question now for Africa is how badly it will be bruised by the global financial meltdown.

“It’s becoming clear that many developing countries — African countries — will not be immune to the spillover effects of this global financial crisis,” says CEO, Gold Coast Securities, Ben Kujar. So, we consider that … particularly poor people within these countries are now in a kind of danger zone. And the danger for them lies in the fact that they’re taking a hit from what I call the “Four Fs” — the fuel crisis, food crisis, the fertilizer crisis and now the financial crisis.”

Ben Kujar is referring to the massive rise in the price of the three commodities — fuel, food and fertilizer — over the past year or so that has prompted riots in several African countries, including Ghana. He warns that the current global turbulence could certainly have a knock-on effect on the continent.

“In terms of the liquidity crunch, and in terms of the impact of exports, this could be the medium through which this is transmitted to developing countries — African countries,” He says. “And so, what we need to pay attention to is this quadruple whammy — food, fuel, fertilizer and finance — so that they begin to prepare how to bolster themselves to take care of these. And we can help.”

But will that World Bank pledge make a difference to the lives of people like Maria Koomson, the Ghanaian street vendor?

Koomson’s priority right now is just to be able to put food on her table. She says nothing is going right in Ghana, and life is just too pricey. Looking beyond individual cases, there’s also the issue of foreign aid — if donors are feeling the financial pinch, won’t they be inclined to reduce aid to Africa?

“There is fear and uncertainty about that, but we … hope that even though developed countries are struggling right now with their own crisis, that they will not cut back on what they have promised to the developing countries, because a 1 percent reduction in growth could trap 20 million more people into poverty,” Ben Kujar says.