Update (as of 27.04.2020): Corona in Ghana and the impact it will have on the economy.

Posted on Posted in en, Neuigkeiten, Stories, Uncategorized

Due to given circumstances we, the German fairafric team, have made the decision to work from home until further notice. In view of the current development of the Corona pandemic, we see the necessity to take this step. We want to make our contribution to keep the curve (of the infection rate) as flat as possible (#flattenthecurve).

In Ghana as well, a curfew has been enforced since 30 March for the greater Accra area, including Tema and the greater Kumasi area. For the time being, the measures apply for two weeks and must be strictly adhered to. However, what exactly does this mean for the Ghanaian economy, its society and our colleagues? We have taken a closer look at the current situation.

The effects (of the crisis) on Ghana are generally stronger than in many countries, as the economic relations with China are more consolidated than ever before. The virus in Ghana, for example, had already had serious effects before the first case of infection.

These effects can be observed in two different ways. One is indirect – the slowdown in global economic growth is limiting Ghana’s own growth potential within the global economy. The other is direct – the impact on mutual trade and investment between Ghana and China, on global oil and gold prices and on tourist flows between the two countries is significant.

However, some of these effects are more positive than negative, at least for the moment. As a result, the coronavirus outbreak is more complex than directly related to Ghana’s economic development.

Ghana’s main export goods are gold, cocoa and mineral oil. Experts assume that the export of commodities such as gold is more likely to increase in times of crisis, but in the case of cocoa and mineral oil it is strongly dependent on continued demand.

At the moment it is not yet possible to estimate the impact on the cocoa market. However, the following also applies to the cocoa trade: In times of risk, the prices of all products on the markets tend to move downwards. When the markets are hit by price fluctuations, rationality often takes a break. For us at fairafric Germany and fairafric Ghana it is absolutely essential to show solidarity, especially in these uncertain times. We will continue to pay organic premiums to our farmers and maintain our long-term cooperation partnerships, which are even more dependent on it due to the current situation. Unfortunately, the situation offers some uncertainties, which is why it is necessary to maintain a fair and transparent relationship through all supply chains. We remain optimistic, however, because the universal love of chocolate could make price developments on the cocoa market much less sensitive to the current risk situation. Especially in the current situation, people are more likely to consume more cocoa products than less.

The price of oil has fallen as a result of the current economic downturn as demand in this sector has decreased. This is an area where Ghana will feel direct effects due to the outbreak of the virus. Consumers of petroleum products throughout Ghana are preparing to benefit from lower prices at the pump. Calculations of the price increase (during the current pricing window) have become negative.

The other significant impact on the Ghanaian economy is the impact on exchange rates. Since travel to China has become highly unattractive, imports from this country have collapsed. The value of Ghana’s own currency is therefore increasing, as more transactions are being carried out with the Cedi again. The resulting appreciation of the Cedi has shown how great the demand for foreign exchange is on the local currency markets to cover payments for Chinese imports. In the middle of this week, the US dollar was trading below 5.30 GHc (Ghanaian Cedi), up from around 5.50 GHc a month ago, as Ghana is once again increasingly trading its own currency due to the current situation.

The government will have to make some adjustments, as the revenue from import duties will inevitably decrease. Conversely, the imported price increase will slow down considerably, which will relieve both the state and the households nationwide. Since Ghana is heavily dependent on imports and its export revenues depend largely on primary commodities, there will be far more winners than losers in an upgraded Cedi. Sooner or later, however, the unavailability of relatively cheap consumer goods and industrial inputs from China will make itself felt, which will cause problems for households and companies alike.

Perhaps the greatest benefit for Ghana, however, will come from the rise in the price of gold in global markets, as economic uncertainties are driving investors around the world to invest their capital in gold. Earlier this week the gold price climbed to a high of $1,691.70, the highest price since early 2013, before retreating somewhat. As Africa’s most important gold producer, Ghana should benefit greatly from the ongoing price hike.

In Ghana, the first officially reported cases of COVID-19 have also been reported in recent days. 2.5 million GHc (USD 456,204.38) has been provided by the government as start-up aid for the first implementation of the national preparedness plan. As a result, the Ministry of Health, among others, has initiated a procedure to procure 10,000 pieces of personal protective equipment for workers in vulnerable professions. In addition, a national technical committee has been set up to coordinate with experts from various health and safety agencies, and other relevant stakeholders have been involved in the fight against the disease.

For case management, the Ministry of Health had designated treatment centres, isolation facilities and waiting areas to deal with all confirmed or suspected cases. The Tema General, Ga East, Ridge and Police Hospitals, as well as all regional and teaching hospitals are able to treat cases in case of increased number of cases in Ghana. The Ministry has provided training for case management teams in the Tema and Ridge hospitals and has initiated a process to identify additional centres in the densely populated areas of Accra, Kumasi, Takoradi and Tamale.

In conclusion, two of Ghana’s three primary commodities should withstand the crisis well. Especially the value of gold will have a positive impact on the economy in Ghana due to the increasing investments. The value of cocoa could decrease somewhat due to the current situation, but demand is likely to remain stable, as cocoa products and especially chocolate are a product in constant demand. Nevertheless, limited and delayed freight traffic is likely to have a significant impact on the export and trade of cocoa products.

Addition 27.04.2020

We at fairafric are strongly rooted with Ghana and the African continent through our subsidiary company fairafric Ghana Limited. Therefore it is a matter of the heart for us to take a stand on the current reporting.

The Corona crisis is a global problem, which every country, even every continent, handles differently. The African continent is often portrayed with little accuracy in the Western media and sometimes not even mentioned. Yet the distribution of roles is often clear: the Western world has functioning systems, with every cog in the wheel. The African countries, however, are heavily dependent on our help, as the systems there can only function and flourish with our support. That this way of thinking is not only exaggerated, but fundamentally unacceptable is shown very clearly by the current situation, among other things.

Staff of the Coronavirus Isolation Station at Mbagath Hospital in Nairobi. Foto: Njeri Mwangi/reuters

20,000: In this case, this is not a meaningless number, but the number of people infected with corona throughout Africa. Thus, the novel virus creates an extraordinary scenario: Europe and the Western world are the center of the epidemic, Africa plays a rather subordinate role.

However, to reduce Africa’s smaller number of infected people only to the geographical location or climatic conditions would not only be fatal, but simply arrogant. After all, African governments have in some cases reacted much more quickly and confidently to the corona crisis, as the recently announced takeover of the Ghanaian people’s water bills shows, for example. While in Europe some measures were only taken after the outbreak and the subsequent spread, in Africa many countries have drastic restrictions on public life from the first confirmed case of corona, if not before. Madagascar will stop all flights to Europe for 30 days. Rwanda will close all schools and churches with immediate effect. Kenya is having a 25-member team track down and quarantine all contact persons of the person reported as infected on return from the USA. Senegal cancels its Independence Day celebrations.

Currently, some companies in Ghana are even producing personal protective clothing such as face masks, doctors’ gowns and headgear for the workers who are at a higher risk of infection. The companies Dignity DTRT, Sleek Garments, Cadling Fashions, and Alfie Designs Limited were chosen by the government in a strict selection process. This ensures that the equipment meets the highest standards.

Ghana’s Minister of Trade, Alan Kyerematen, even visited the individual companies personally and expressed the gratitude of the government and the people to the management and employees. He also took the opportunity to once again refer strictly to the hygiene requirements of the WHO (World Health Organisation).

The companies plan to produce a total of 3.6 million masks, which will be distributed throughout the country. At a press conference on COVID-19 on 7 April 2020, Health Minister Kwaku Agyeman Manu said that all masks are expected to be ready within a week.

“The President is making every effort to provide the ministry with resources to
ensure that we have an adequate number of protective equipment. In his speech
he spoke of using the opportunity of the crisis to build local capacity to deal
with some of these things on the ground. As I speak, the Minister of Trade has
selected five (local companies) to sew 3.6 million face masks. They will start
delivery starting tomorrow. We will receive 150,000 pieces every day, and
within the next seven days the whole country will be flooded with these masks,
especially for health workers,” Agyeman continued.

Minister of Trade Alan Kyerematen visiting a manufacturer of protective equipment

Of course, all this is also driven by the concern that, once the virus is established, it could ravage Africa even more devastatingly than elsewhere due to a lack of universal health care. However, while there was international concern at the beginning of the coronavirus’ spread that Africa was the worst equipped, it is now clear that the experience gained in combating other diseases such as malaria or Ebola has been extremely useful.

We have therefore noted that the African continent is containing the crisis fairly well and wants to prevent infections from rising too high, which would undoubtedly highlight huge problems in the health sector. The preventive measures show that the African countries are doing everything possible to protect their people to the best of their ability. But why is this side of the coin not being shown in the Western media? One example is the Tagesschau report on Easter Sunday on the spread of the corona virus in Africa. There, Africa was united as one big mass, where “experts assume that the infection rate there (in Africa) will be much higher than in Europe or the USA”. The only expert mentioned was then Bill Gates. Bill Gates? A man who without a doubt achieves a lot of good things outside his field of business. But this does not make him an expert at all. Especially when it comes to Africa.

Tagesschau” spokeswoman Linda Zervakis moderating the article about Corona in Africa. Foto: Screenshot “Tagesschau”

In Western reporting, African experts are hardly ever used for assessment. For example, no opinions were obtained from the test laboratories staffed by experts, which are spread over all regions of Ghana. The teams of the Noguchi Memorial Institute for Medical Research, Kumasi Centre for Collaborative Research as well as the National Public Health Reference Laboratory all have sufficient expertise but are not interviewed at all by Western media. They could have reported first-hand how sovereign the African countries are in some cases and how, as mentioned above, much more efficient preventive measures are being taken against the spread of the disease. However, this differentiated view is often missing, and is therefore quickly forgotten: Africa is more than just a country. Africa is a continent with 55 states and almost 30 million square kilometres. The African countries all have their own independent governmental institutions, which is unfortunately not appreciated enough by the statement “in Africa”, which suggests that all these countries operate under one leadership.

The current situation should make it clear that African countries and governments are more capable than we are sometimes taught. It would therefore be a worthwhile consequence to look beyond the horizon for once in reporting and to draw on media and expertise from African countries. After all, many good ideas and approaches to solutions also originate there.