Ghana is facing one of its worst economic crises in decades. Last month, soaring in ation and public debt came to the boil when protesters took to the streets calling for the resignation of the country’s central bank governor.

But the central bank is optimistic that a recovery is gaining momentum, with the current in ation rate sitting at a 14-month low of 35.2%.

Dr Maxwell Opoku-Afari, rst deputy governor of the Bank of Ghana, and Kwamina Duker, CEO of the Development Bank Ghana (DBG), describe their plans to not only navigate out of this crisis, but leverage the opportunities for change it presents.

“Don’t waste a crisis,” says Mr Duker. “There is an opportunity today for all of us to change behaviour.”

“I agree — we need to take advantage of this crisis to change the way we do business,” adds Mr Opoku-Afari. “Nobody wants to waste the crisis.”

Reshaping the economy

According to DBG, Ghana’s economic woes provide a key opportunity to channel more capital into the private sector and reshape an economy that has been dominated by public sector spending.

“Banks are no longer putting all their funds into government securities,” says Mr Duker. “They are now looking to lend more to the private sector as a necessary diversi cation because of the shock they had when the government did the debt exchange.”

According to Reuters, Ghana concluded the rst phase of its domestic debt exchange in February, with 85% of eligible bondholders participating, and then reopened the debt exchange in September for another 12.9bn cedis ($1.1bn) of local bonds.

“Now is the time to channel more capital into the private sector because the same currency depreciation has made exports more competitive,” he adds.

In May 2023, the International Monetary Fund announced a $3bn extended credit facility arrangement for Ghana in hopes of putting the country’s economy back on track a ter it defaulted on its debts at the end of 2022. The programme also focused on encouraging private investment and growth.

“At the moment, we are not seeing capital going into the private sector because we had a debt restructuring,” says Mr Opoku-Afari. “The [commercial] banks took a hit but we have seen signs of recovery of the banks’ balance sheets in the rst half of the year. We are done with the domestic debt restructuring and are expecting the external debt restructuring to be done soon.”

We are very optimistic that the banks will begin to increase their credit into the private sector

Dr Maxwell Opoku-Afari

“When you’re going through this debt restructuring, you expect the commercial banks to audit their books, look at their balance sheet and say [to themselves] that now that they are beginning to see stability, [and] they can start to increase credit levels in the private sector,” adds Mr Opoku-Afari. “We, as a central bank, are very optimistic that once we are able to solidify and consolidate these [economic recovery] gains, the banks will begin to increase their credit into the private sector.”

Over the past year, Ghana’s central bank has raised interest rates in attempts to curb its surging in ation. The country’s food price

in ation stood at 54.2% year on year in July, a ter having seemingly been on a downtrend since January 2023. This is signi cantly higher than what Ghanaian consumers are used to, as over 2015–19,

in ation averaged at just 12.4% year on year.

“Ghana has really done a lot now to be able to contain this crisis and to be able to turn things around. We’re beginning to see economic stability is taking shape,” says Mr Opoku-Afari. “In ation is coming down signi cantly, dropping from 54% at the beginning of this year to 35% in November, so in just 10 months we’ve turned things around.”

“What we need to do now is to consolidate against the gains we’ve made and make sure that [they are] well anchored to better prepare for the future,” he adds.

UTC initiative

The central bank has also turned its attention to grow its micro, small and medium-sized enterprise (MSME) sector and, in collaboration with the Monetary Authority of Singapore, recently launched an open global initiative called Universal Trusted Credentials (UTC).

The UTC initiative proposes a framework for the creation of trusted credentials that help characterise an MSME’s creditworthiness so they may have better access to nancing.

“One of the biggest challenges we’ve had is making sure that our development policies reach the ordinary person on the street, right to the rural areas and to the micro level,” says Mr Opoku-Afari. “We see room for scaling up but we rst need to wait for initial reporting data coming in from the project.”

According to BMI, a Fitch solutions company, progress regarding the restructuring of Ghana’s external debt under the G20 Common Framework will likely boost investor con dence in 2024.

Earlier this month, the African Development Bank (AfDB) also announced a $102.59m grant to support Ghana’s scal consolidation, which will be implemented over a two-year period.

“We are also working with AfDB on long-term initiatives, such as a potential youth entrepreneurship programme,” says Mr Duker.

He adds: “The AfDB and the Ghanaian government are thinking long term — it’s not just about putting out today’s   res but making sure we don’t have those res going forward.”