On Wednesday, September 21, President Nana Addo Dankwa Akufo-Addo told the 77th session of the United Nations General Assembly that the ongoing Russia-Ukraine conflict is being felt directly in Africa.
He stated that the war has had an impact on African economies, including Ghana’s.
Mr Akufo-Addo told the Assembly that the conflict erupted just as Ghana and other African countries were attempting to recover from the pandemic.
“As we struggled with these economic challenges, Russia’s invasion of Ukraine burst upon us, exacerbating an already difficult situation,” he said.
We are not only shocked to see such deliberate devastation of cities and towns in Europe in 2022; we are also experiencing this war directly in our lives in Africa. “Every bullet, bomb, and shell that hits a target in Ukraine hits our pockets and our economies in Africa.”
“The economic turmoil is global,” he added, “with inflation as the number one enemy this year.” It recently reached a 40-year high in the United States and the United Kingdom. In the eurozone, inflation is at an all-time high. Inflation rates in several African countries are now three to four times higher than they were just two years ago. Ghana is experiencing the highest inflation rate in 21 years. Food prices are disproportionately affecting the poor, particularly the urban poor.
“Moreover, the spillover effect of central banks raising interest rates to combat inflation has been severe beyond borders, as global investors pull money out of developing economies to invest in developed-world bonds.”
“This has resulted in currency depreciation and higher borrowing costs, implying that we must raise and spend more of our own currency to service our foreign debts in US dollars.”
“If there was any doubt, it is now clear that the international financial structure is skewed significantly against developing and emerging economies like Ghana.” The avenues that are opened to powerful nations to allow them to take measures that would relieve economic pressures are closed to small nations. To make matters worse, credit rating agencies have been quick to downgrade African economies, making it more difficult to service our debts. The label of Africa as an investment risk is, in essence, a self-fulfilling prophecy created by international money market prejudice, which denies us access to cheaper borrowing, pushing us deeper into debt.
“The financial markets were established and operate on rules designed to benefit rich and powerful nations, and during times of crisis, the façade of international cooperation under which they purport to operate vanishes.” These are the harsh lessons we’ve had to learn as the world emerged from the grip of the coronavirus, resulting in price increases for energy and food, as well as an increase in the global cost of living. The need for systemic reform is compelling.”
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