The global economic downturns also referred to as global credit crunch or crisis is affecting people everywhere in the World either directly or indirectly. Some people argue that it is not a global issue but a Western and European problem. Some economic analysts have likened the crisis to the Great Depression of 1930s. Whatever the case may be Ghana, and for that matter Africa, will be affected adversely.
Clearly, what began as a financial crisis in East Asia in July, 1997 has now developed into a full-blown global economic crisis. Recent developments in Japan and Russia helped to extend the crisis. It was the recent overlapping effects of the Japanese and Russian crises that have been a major cause of the recent worsening in the global economic situation. The intensification of the crisis has dramatically exposed the vulnerability of the International financial system to short-term capital flows and policies of financial deregulation and financial liberalization being pushed by the West through the IMF, World Bank and the WTO (Third World Network).
In Ghana, Dr. Paa Kwesi Ndoum said a stimulus package is needed to boost the economy which the Finance Minister and others disagreed completely. However, one area which contributes a lot to the economy of Ghana but which will reduce drastically is remittance flow from abroad.
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Remittances are defined broadly as the monetary transfers that a migrant sends to his/her country of origin or, in other words, financial flows associated with migration. Most remittances are personal cash transfers from a migrant worker or immigrant to a relative in the country of origin. It can be funds invested, deposited, or donated by the migrant to the country of origin. Some scholars go further to include transfers of skills and technology, as well as “social remittances” (Baruah, 2006 in OSCE, IOM, ILO, 2007).
International remittances received by developing countries in 2005 were estimated at around US$167 billion and have doubled in the last five years (World Bank, 2006). Migrant remittances cannot be underestimated as it contributes to foreign exchange, which go a long way to help countries acquire vital imports or pay off external debts. Remittances also play an important role in reducing poverty (World Bank, 2006 in OSCE, IOM, ILO, 2007). Remittances amount to approximately 8% of Ghana’s GDP (estimated at US$ 6,160 million in 2002) (Takyiwaa, 2005, page139).
The global economic downturns will affect remittances because those who contribute to remittances will be laid off their jobs. So many Ghanaians over the past decades migrated abroad especially to Europe and America in search of greener pastures. Some went there legally and others illegally. They do all kinds of work from sweeping of streets to lecturing in the Universities. Some students in our Ghanaian Universities who travel abroad during holidays to do “International any work” are referred to as “burgers”.
They enjoy ‘better lives’ on campus because of the few dollars and pounds they bring home. All these migrants whether temporary or permanent are the very people who contribute the remittances to our economy. The services of all these people however will be cut down because organizations and institutions in which they work will find it difficult to pay them. Some will be retained but their salaries cut down. Australia is to cut its intake of migrant workers for the first time in a decade amid concern that the skilled foreigners could stoke local resentment at a time of rising unemployment. The revised intake will see the quota of skilled migrant workers for next year slashed by about 14% from 133,500 previously to 115,000.
Foreign bricklayers, plumbers, carpenters and electricians are expected to be affected by the new policy (Daily Graphic, 17th March, 2007, page 2). From this, it is obvious that remittances abroad will be reduced because workers will receive less pay which will be insufficient for them to remit back home.
Also, Poverty is likely to increase because a cut down in remittances means some people will go hungry. This is so because some people in Ghana depend solely on their relatives abroad. Their utility bills ranging from water to electricity bills including rent are catered for by their relatives abroad. The volume of remittances from Ghanaians abroad has dropped by some 16% in line with general expectations of a possible dip. Latest figures sighted by Joy Business Report show that monies sent from Ghanaians abroad to relations home, between January and February, 2009 stands at $250 million, a drop from the $300 million registered for the same period last year (The Ghanaian Times, 14th April, 2009, page 27).
Nevertheless, Ghana also stands to benefit if the so many skilled people who traveled abroad in the 70?s and 80?s decide to come home with their knowledge and expertise. Some will come as entrepreneurs to set up businesses and create employment for the many unemployed graduates who are roaming on the streets of Accra and other cities with their certificates in search of non-existing jobs. Others will take up appointments to lecture in our universities, polytechnics and training colleges whereas the nurses and doctors who probably will also return will help bring good health care delivery to the people.
Conclusion could be drawn by saying that whether a stimulus package or not, the global economic crisis will affect all of us in Ghana directly or indirectly. What is important is that, we should be well prepared for it by creating a conducive atmosphere needed for businesses to thrive well. It is gratifying to hear that the government is set to make the agricultural sector more productive and the engine of growth of the economy.
Apart from the many employment opportunities it will create, it will also help in food sustainability and increase foreign exchange flows. My plea is that, it should be supported by a political will and we the people should learn to tolerate one another whether one belongs to party A or party B and stop over politicizing issues. This will go a long way to help us in this period of global crisis. When the right measures are put in place, there will be no going back and we will move forward in unity and progress.