Africa ( Commonwealth Union) _ Ghana’s history of seeking assistance from the International Monetary Fund (IMF) has been frequent, with a total of 17 bailouts since gaining independence, averaging approximately once every four years. However, obtaining a bailout package from the IMF this time was relatively easier compared to the challenges that lie ahead.
The Ghanaian government now faces the task of convincing creditors to grant over $22 billion in debt relief, which is complicated by the fact that a significant portion of the country’s external debt is held by private lenders who expect full repayment. Commercial lenders, including bondholders, hold 76% of Ghana’s external debt. Multilateral development banks, the Paris Club, and China also hold substantial portions of the debt.
The situation is further complicated by Ghana’s default status, which makes reaching an agreement on debt relief even more challenging. Bondholders, in particular, are reluctant to provide concessions, and geopolitical factors also come into play.
Professor Theophilus Acheampong, an economist and visiting Senior Fellow at the Africa Policy Research Institute, provides insights into the intricate negotiations surrounding Ghana’s debt restructuring and its creditors.
In another African context, Zimbabwe has resorted to dollarization since 2009, adopting various currencies, including the US dollar, as a means to combat inflation and economic collapse. However, in 2019, the country reintroduced a local currency called RTGS, which is now facing challenges such as inflation and high-interest rates. As a result, manufacturers, retailers, and suppliers prefer to settle transactions in US dollars, with only a small portion conducted in the local currency.
Meanwhile, African business leaders, investors, and policymakers have thrown their support behind the African Continental Free Trade Area (AfCFTA) as a means to boost intra-African trade. However, to fully unleash the potential of the trade bloc, there is a need for a significant increase in local manufacturing. Agro-processing has been identified as one of the most promising sectors in this regard.
