By Dr Papa Kwesi Nduom
A few days ago, I posted the following about the Coronavirus:
“This is the threat to the global financial system we must guard against. As many countries begin to take proactive steps to deal with this global health threat, conferences, factories, business, social and sports events of all types are being put on hold. The World Bank/IMF spring meetings this year are not going to have mass physical interactions that will need thousands to travel to Washington, DC. The global financial system will react. Herein lies the economic threat.
Ghana must take steps to manage the impending threat to our fragile economy. Yes, this is an election year. However, politicians must think of the nation and not themselves by limiting mass gatherings. On the economic front, the needs of the private sector must be put in front in a way that brings more liquidity to indigenous enterprises. This would be a great time to pay infrastructure, school feeding and all types of contractors. Chances are that Chinese, American and European exports and fund flow will be in a go slow so a domestic stimulus will be needed.
So it is not just a health scare that we face. It could be an economic nightmare. In an election year. Are we prepared for this?”
The right decisions are now being made by governments all over the world to limit human contact slow the spreading of the disease while the world waits for a vaccine.
In Ghana, the negative impact on businesses and the economy as a whole has started. Without the virus, $100 million voted to fight it could have been allocated for development and job creation. Importers of raw material and finished goods from China are already suffering from low sales.
Those whose businesses rely on tourists, domestic and international meetings and conferences like hotels, restaurants etc. are experiencing low occupancy amid cancellations. Printers, entertainers and others who promote and manage events are seeing contracts cancelled or suspended. So there are problems. But there is also a silver lining.
This is the time for an immediate stimulus to be given to indigenous Ghanaian enterprises. Not too long ago, a lot of attention was paid to the promotion of local rice production. This is the time to find the rice millers and stimulate their businesses with funding to procure raw materials and support their operations.
Another area to be supported involves the pharmaceutical and printing industries where imports have been competing with local enterprises. State agencies are collectively a huge market so immediate shift to buy local will make a big difference. The hospitality industry can use reduction and deferment of taxes and stimulus cash to stabilize payroll and retain employees. This is also an opportune time to take care of local contractors particularly those who had started work on “legacy” projects (prior to 2017) for COCOBOD, GetFund, Road Fund and others.
This is the time for all regulators in the system (financial and production) to proactively seek out indigenous Ghanaian companies and help them to gain strength and a sound footing in the home market.
Times like this needs liquidity. A stimulus given to indigenous Ghanaian enterprises in response to this emergency situation will turn a challenging situation into a great opportunity for local control of the nation’s economy.