The coronavirus pandemic is disrupting world order and grinding almost everything to halt, killing thousands of human beings and businesses in its wake. The COVID-19 is expected to have its impact on Ghana as well.
In response to this, the World Health Organisation (WHO) has rolled out some measures to combat the spread of the virus. Countries across the globe have adapted and modified same to suit their individual peculiarities in containing the disease.
These measures, although intended to save lives and mitigate negative social impact of the coronavirus pandemic, have had severe consequences for economic activities across the world.
Despite the measures, there have been over three million reported cases, globally, as at 1pm, Thursday, April 30, 2020, resulting in the death of more than 200 thousand people. Since its outbreak in Wuhan-China in November 2019, the world economy has not remained the same. Several economic projections for the 2020 have been rendered virtually useless.
For instance, prior to the outbreak of the pandemic, global Gross Domestic Product (GDP) was projected to grow by some 3.3% in 2020.Experts, according to a Deliotte report are now forecasting that total world GDP growth will fall to about 2.9% growth rate this year.
Again, a yet to be published study has been conducted by a Ghanaian Chartered Economist, Dr Ebenezer Ashley, to examine the impact of the COVID-19 on Ghana’s economy and on global economic activities and output. He estimated that global economic losses would be around US$2.7 trillion, ranging from 3.05% to 3.06% of projected global GDP of US$88.574 trillion or US$88.312 trillion for 2020.
Focus on Ghana
Bringing it home, the impact of COVID-19 on the economy of Ghana is projected to plummet from a target of 6.8% to about 2.6% in 2020 due to the ravaging impact of the coronavirus pandemic.
Similarly, revenue for the country is also predicted to fall significantly in 2020.
Last month, Ghana’s Finance Minister, Ken Ofori Atta, told the country’s parliament that government will lose revenue in the 2020 fiscal year to the tune of about US$1.9 billion. This is equivalent to 2.5 percent of the country’s GDP, as a result of Covid-19.
Additionally, per a Deloitte publication, the estimated impact on the country’s tax revenue is pegged at GH₵808 million shortfall in import duties and GH₵1,446 million loss in other non-oil tax revenue. The overall total deficit in non-oil tax revenue for the year is estimated at GH₵2,254 million.
Again, Mr Ofori-Atta, is reported in a GhanaReport publication to have mentioned that Ghana’s overall fiscal deficit is set at GH₵18.9billion (4.7% of GDP). This is expected to widen to as much as GH¢30.2 billion or 7.8% of GDP.
Therefore, Ghana is left to bridge a fiscal gap of GH₵11.4bn or 2.5% of GDP.
The Finance Minister in the said publication remarked that “the country’s primary balance would correspondingly worsen from a surplus of GH¢2.811bn (0.7% of GDP) to a deficit of GH¢5.6bn (-1.4% of GDP)”.
But how are the other sectors of the Ghanaian economy doing amid the pandemic?
Below is an analysis of the impact of pandemic on some key sectors of the economy in the wake of the Covid-19 pandemic, as compiled by Ghana Talks Business
Agriculture sector – Impact of COVID-19
As part of efforts to contain the spread of the pandemic, the Government of Ghana rolled out a number of directives. Some of these include closure of borders, ban on public/social gatherings and partial lockdowns in Accra, Tema, Kasoa and Kumasi.
However, these measures, particularly the lockdown, which has since been lifted, and border closures, created some difficulties for the agric sector. Hence, there were disruption in transportation to cart farm produce to the markets.
Apparently, the supply chain for farm produce was hampered, affecting demand for agricultural products in the process.
It also limited farmers’ access to farming inputs such as seeds, fertilizers and insecticides, and access to markets.
Again, it resulted in a reduction in the volume of the main agricultural exports for the year.
There is also a general fear in the country that there will be shortage of food if the pandemic prolong. This could lead to inflation in food prices, especially the food security crops such as rice, beans, millet, sorghum, as well as poultry, vegetables and other agric produce.
Some of major export earners in the agricultural value chain are currently struggling, as the pandemic has not spared anyone.
For instance, Cashew, one of the major export cash crops that fetches between US$378 million and US$981 million annually for Ghana, is severely affected by the outbreak of the coronavirus pandemic.
This has resulted in huge losses for farmers. They have seen prices drop from US$130 for a 100kg bag of raw cashew nuts to just US$75. This is owed to the price dip in in the world market by al least 4 percent since week commencing 13th April, 2020
Equally, Cocoa, another major export cash crop for Ghana, is affected by the pandemic. This again will result in revenue losses for the state. Ghana and Cote Divoire, together, produce about 65 percent cocoa consumed globally. The impact of Covid-19 on cocoa production and processing is unimaginable.
The Chief Executive Officer of the Ghana Cocoa Board, Mr Joseph Boahen-Aiddo, in an interview with Accra-based Joy News, a while back said the drop in demand for the crop will create huge deficit for the country.
“Immediately, it brings to Ghana a deficit of almost US$1 billion. If this thing should continue, paying our farmers will be difficult,” he said
Since the outbreak of the pandemic, there has been significant decline in international prices of crude oil. This is as a result of fall in demand. Crude oil prices have plummeted from US$63.21 a barrel in November 2019 to US$21.32 per barrel as at April 28, 2020.
This drop in prices, due to the decline in global demand for crude will obviously affect government petroleum revenue estimate for the 2020 fiscal year.
Figures published by Deliotte indicates that the estimated impact of the pandemic on petroleum receipts for Ghana will be dire. There will be a shortfall of about GH₵1,058 million in the Stabilisation Fund.
Also, shortfall in the Heritage Fund is estimated to be GH₵453 million. Gap in Annual Budget Funding Amount (ABFA) is pegged at GH¢3,526m. While deficit in transfers to Ghana National Petroleum Commission is forecasted at GH¢642m.
By Salifu B.B. Moro
Part two of this article will be published within next week