Ghana’s economic crisis has been making global headlines since last year with demonstrations over the rising cost of living rocking president Akufo-Addo’s government. The country’s debt has inflated, currency plunged, economic growth slowed, and even defaulted on its foreign debt last December before the IMF stepped in for a bailout for its 17th loan. The western African country’s debt is now almost 90% of its GDP.

It is such economic situations that have convinced digital-native Ghanaians to invest in crypto in a bid to protect their asset values from dwindling further. In a country of 33 million people, about 20% of its adults own cryptocurrencies, with the ratio expected to rise in the coming months.

Last December, former Twitter CEO Jack Dorsey, who set up the company’s first Africa office in Accra before his exit, was back to the country, this time round to attend the Africa Bitcoin Conference. This further shows the country’s strong foothold as a Web3 investment destination, due in part to its recent history of political stability and democratic rule.

So what has been the actual economic and Web3 situation in Ghana in the first five months of 2023? Here are the major highlights:

January – Slowing Economic Growth

Fitch Solution cast Ghana’s economic outlook for 2023, bleak with real GDP growth slowing to 2.9%, from an estimated 3.3% in 2022. Fitch projects prices of goods to remain elevated, adding there would be “weaker access to credit for both businesses and the government”.
Inflation rate still above a 50% mark, down slightly from 54.1% in Dec 2022 to 53.6% in January.
The cedi falls to a high of 12.45 against the US dollar at the end of January from 9.00 in December.

February – Crypto Adoption Soars as Economy Suffers

According to the February Crypto Adoption Index, Ghana is reported to be the 9th country in the world in the rate of adult crypto ownership. In the report, Ghana is just behind countries like Australia, Indonesia, Nigeria, Malaysia, and Russia.
The S&P Global reported the economic downturn in Ghana’s private sector softened at the start of 2023 as inflationary pressures showed signs of easing. But this came amid talks of the International Monetary Fund’s bailout program for the ailing economy.

March – Easing Inflation on Bailout Hopes

The delay of the IMF bailout saw inflation soar in the country as commodity prices surged. Experts describe the economic situation in Ghana as the “worst run of poor economic conditions in decades.”
The inflation rate in Ghana saw a decline, with hopes of closing the IMF bailout deal. The rate stood at 45% in March, down from 52.8% a month earlier, according to Ghana Statistical Services.
Ghana shocks everyone by raising interest rates to 29.5% despite slowing inflation. The central bank announces that commercial banks’ required reserve ratios would increase to 14% from 12% starting April 13.
The pilot phase of the implementation of Ghana’s Central Bank Digital Currency is complete, with selected consumers at Sefwi Asafo in the Western North Region using the currency to buy items, goods, food and services. However, a nationwide rollout is delayed, with the central bank citing tumultuous economic situation since last year.

April – Improved Cross-Border Payments with Crypto, GSE rebounds

Ghana was a beneficiary of the collaboration between Jack Dorsey-led Block and the pan-African crypto platform, YellowCard, to increase cross-border payments to 16 African countries.
On April 6, the cedi tightens against the US dollar to 10.79 up from a low of 12.90 in February.
The Ghana Stock Exchange shows positive gains. A report shows a year-to-date return of 12.18% despite the fact that the GSE Composite Index, which tracks the performance of all companies on the market, lost 3.87 points in April. Shares of companies like Benso Oil Palm Plantation (BOPP) and Unilever Ghana Limited (UNIL) rose by 20.91% and per 20.00%, respectively.

May – Bailout, At Last

Japanese Prime Minister Fumio Kishida, visited Ghana and held bilateral talks with President Nana Akufo-Addo. Kishida pledged to provide $500 million in financial support to Africa over the next three years. Kishida’s trip is expected to lead to more investments by Japanese companies in Africa in the years ahead.
The IMF finally announces a $3 billion bailout for Ghana.
The central bank orders all commercial banks to show proof of their recapitalization plans by September this year. They are expected to raise $40 million to stay in business.

-Edited by Shigeru Sato, Faustine Ngila