President Nana Addo Dankwa Akufo-Addo has said the global economic turmoil which has seen inflation hit a 40-year-high in the US and UK had also seen inflation surge three to four times higher in African countries than they were two years ago.
President Akufo-Addo said this phenomenon of high inflation rates and downturns caused by the COVID-19 pandemic, has further been heightened by Russia’s invasion of Ukraine.
He said despite the horrific scenes such as the deliberate devastation of cities and towns in Europe, “we are feeling this war directly in our lives in Africa. Every bullet, every bomb, every shell that hits a target in Ukraine, hits our pockets and our economies in Africa.”
President Akufo-Addo said it was doubtful that any generation on earth had ever
witnessed such global economic chaos, a war with global consequences, and an unwillingness or inability to find a consensus to deal with the catastrophe.
Speaking on the theme: “A Watershed Moment: Transformative Solutions to Interlocking Challenges,” on Wednesday at the 77th Session of the United Nation’s General Assembly, New York, President Akufo-Addo said these high in inflation rates had increased the costs of food astronomically, hurting the poor, especially the urban poor, the most.
The spillover from central banks, to raise interest rates to combat inflation, according to the President, had been severe beyond borders, as global investors pull money out of developing economies to invest in bonds in the developed world.
That, President Akufo-Addo indicated, had led to depreciating currencies and increased borrowing costs; “meaning we need to raise and spend more of our currencies to service our foreign debts in US dollars.”
“It has become clear, if ever there was any doubt, that the international financial structure is skewed significantly against developing and emerging economies like Ghana,” he stated.
According to him, the avenues opened to powerful nations to enable them to take measures that would ease pressures on their economies were closed to small nations.
To make matters worse, credit rating agencies, President Akufo-Addo hinted, had been quick to downgrade economies in Africa, making it harder to service their debts.
The tag of Africa as an investment risk, a self-fulfilling prophecy created by the prejudice of the international money market, had also denied it access to cheaper borrowing, pushing the continent deeper into debt.
President Akufo-Addo said the setup of the financial market, operates on rules designed for the benefit of rich and powerful nations and during times of crisis, the façade of international cooperation, under which they purport to operate, disappears.
He said the necessity for reform of the system was compelling, especially as the world emerged from the grip of the coronavirus to energy and food price hikes and a worldwide rise in the cost of living.
The World Bank observed, last Thursday, that the global economy was enduring its steepest slowdown since 1970.
President Akufo-Addo said despite all these economic downturns that Africa faced, the continent was more than ever before, strengthen in unity and “are working to shed that image of a helpless, hapless continent.”
He said there was a renewed commitment toward inclusive and sustainable industrialisation and economic integration and the intensity of the challenges that the continent faced were matched by the immensity of the opportunity before it.
“We, the current leaders of Africa, should be determined not to waste the crisis that confronts us, President Akufo-Addo urged his colleague African Presidents.