37% Inflation causes Ghanaian traders to lock shops in protest amidst slumping currency
Protests come after a new round of government discussions with the IMF for a $3 billion bailout. The statistics agency in Ghana disclosed last week, that the country's inflation rate has risen to 37.2% which is a 3-point increase from September's report.
The new rate confirmed an alarming cost of living situation in a nation where consumer goods have become almost unaffordable, and the local currency is now the world’s worst performer against the US dollar, according to Bloomberg.
Today, Ghanaian traders are responding to the rising inflation and the resultant high cost of doing business by closing their shops in a three-day protest.
Joseph Obeng, the leader of the Ghana Union of Traders Association, the country’s largest lobbying group for retailers, said in a statement that the combined effects of high inflation, exchange, and interest rates have “deeply eroded” capital by more than 50% this year.
“As I speak to you now, we are not able to service our loans contracted by local banks and external suppliers. We are now at our weak end and can no longer endure any further suffering,” Obeng said.
What is the government doing about inflation?
Rising inflation has been a global occurrence in many countries this year, including in Ghana’s neighbouring country Nigeria where the central bank raised interest rates last month to combat price spikes and a weakening naira. The IMF speculates growth in sub-Saharan Africa to slow from 4.7% in 2021 to 3.6% this year.
For traders in Ghana, though, the fear is that there is no end in sight to their plight, Obeng said.
Ghana’s Nana Akufo Addo-led government has scrambled all year for solutions, including seeking relief from the International Monetary Fund (IMF) to supply new life into the economy.
But negotiations over a $3 billion package that began in July are still far from finalized after meetings that concluded earlier this month.
Abebe Selassie, the IMF’s Africa director, said Ghana would have to map out its economic reform plan as part of the preconditions for receiving the bailout package. He also insinuated that the country’s condition predated the global turmoil intensified by Russia’s war in Ukraine.
“In our regional economic outlook, we are very careful to flag that there are some countries where inflation has clearly been driven more by domestic factors than exogenous factors. I think Ghana would fall in that camp,” Selassie said on Oct. 14.
