GIPC: CEO Yofi Grant Discusses the Impacts of COVID-19 on the Economy of Ghana

Yofi Grant, CEO of GIPC (Ghana Investment Promotion Centre), discusses the impacts of COVID-19 on the economy of Ghana, FDI and investment promotion in the country.

“Before COVID, Ghana had a GDP growth projection of 6.8%. But post-COVID, this has actually gone down to 0.9%. We had expected a year of deflation of 8.0% and a fiscal deficit of 4.7% of GDP. But COVID struck, and we had to readjust our GDP growth. And as we have it, right now, we are projecting 0.9% GDP growth. We are expecting to see a projected primary surplus of 0.7% of GDP, and still a gross national reserve to cover not less than 3.5 months of import. I must say that the pandemic has significantly affected not just us but the whole world because a lot of supply chains were significantly disrupted and many countries were locked down, so they couldn’t do business as usual, people couldn’t travel, you couldn’t have meetings, etc. Almost every country was on lockdown for quite a while, at least for two or three months. And now what has happened since then is a matter of history that everybody knows. Inflation in Ghana increased to 10.6% in April, and then to 11.2% in June. But we expected that year inflation rate to be 12.7% and reduced further from 2021 and hopefully we’ll get to single digit by 2022. We also saw a fall in the economic activity as measured by the Central Bank’s Composite Index of Economic Activity, which dropped by 2.2% in March 2020. But as we speak, although we have a projection of 0.9, if you go to the World Bank’s (the IMF’s) website, they have a projection of 1.5%. Recently, Goldman Sachs actually came out to say they expected 1.2% GDP growth. So, we have definitely done something good while many other countries are in deep recession and resorted to large borrowings. We are not going to go into that sort of deep recession. So, we have done something well, and that has also affected GIPC in what we had planned for the year. But in a very interesting way, because if you look at what has happened in the first quarter going to the second quarter, we realized the impacts. The impact on hospitality, of course, was one of the worst hits. We had about almost 1,000 accommodation facilities that had to shut down by 31st May, which was about a quarter of all the facilities that we had, and job losses were about 2,300 people. The tour operators saw a drop in visits by some 11,558 out of cancellations, which represented at least about almost 5 million cedis. But the agricultural sector was also significantly hit because people couldn’t go to the farms for the fear of catching the disease. So, we saw a decline in the price of cashew by 60% between January and April, which was significant for the farmers and for the exporters. We also saw a drop in the energy sector, with about close to $324 million projects actually being shelved as a result of the pandemic. Of course, the transport sector was also significantly affected. If you look at the metro mass transport, for example, they dropped revenues of 5.5 million a month to about 2.1 million a month, that means that more than 50% of the revenues that they made were gone, maybe up close to 60%. The educational sector also suffered some 856 job losses. 32 private schools couldn’t pay because the kids were no going to school, they had to sit at home and the schools were closed. This was just in the second quarter of 2020, which is significant. The impact on the economy at large was significant”, says Yofi Grant.

“But over GIPC, we saw very interesting dynamics, because in the first quarter, we actually registered foreign direct investment over $180 million, which was some 400% increase on what he had the previous year; on the first quarter of 2019. So that was very optimistic. We had great hopes of continuing the year in very good shape and in good tracks, and then COVID hit. And for the first two months of March-April, we barely had any inflows, we barely had any visits. Of course, we had lots of calls because a lot of investors were asking how we were going to cope with this and what were the measures that we were taking. We did our own research to find the impact on investors and in just one month, the average revenue loss or cost to each investor was about $75,000. We were expecting that that was going to increase because by May-June, almost all enterprises had to be shut and locked down. So, the impact was real. But then came June, and we realized that we had actually increased the amount of foreign direct investment that we had by the beginning of June. The number for the second quarter was $207 million dollars, an increase over the first quarter. And by the end of June itself, we had close to $650 million in foreign direct investment, which was enigmatic and confusing because we expected to see FDI drop significantly, which didn’t happen. So, we are still extremely hopeful. But what it tells you is that the investors look at what the opportunities are. They look at the macro and they look at who is still performing well under the pandemic and target it. So, I believe that is what has put us where we are. We are still very optimistic. We are doing new things in new ways to ensure that we recover quickly and get back to the track on which we were before COVID”, he adds.

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