The year 2022 witnessed a tumultuous period for Ghana’s economy, marked by a significant depreciation of the cedi, soaring inflation rates, and a substantial increase in the cost of living. While the then-ruling New Patriotic Party (NPP) attributed these economic woes to the global repercussions of the COVID-19 pandemic and the Russia-Ukraine conflict, the opposition National Democratic Congress (NDC) countered, placing blame squarely on the NPP’s alleged mismanagement of the economy. This divergence of opinion sparked a heated debate about the root causes of Ghana’s economic downturn, a debate that continued even into 2025.
Dr. George Domfe, the founding President of the Africa Policy Lens, entered this ongoing discussion by firmly dismissing claims of government mismanagement as the primary driver of the 2022 crisis. He argued that the economic turbulence experienced by Ghana was predominantly a consequence of external shocks, rather than flawed policy decisions. Dr. Domfe pointed to a sustained period of economic stability prior to 2022, citing 61 months of controlled inflation rates, which remained significantly below the 15.4% inherited from the previous administration. This period of stability, he asserted, demonstrated the government’s sound economic management until the onset of unforeseen global events.
Central to Dr. Domfe’s argument was the unprecedented nature of the global crises that unfolded in 2022. He highlighted the Russia-Ukraine war, which disrupted global supply chains and triggered an energy crisis, leading to record-high inflation rates in major economies like Germany, the US, and the UK. The conflict, he explained, propelled oil prices to surge from $72 a barrel to $121 a barrel, while freight charges experienced an astronomical 300% increase. These global shocks, according to Dr. Domfe, placed immense pressure on Ghana’s economy, which, like many others, was ill-prepared for such unforeseen circumstances.
Furthermore, Dr. Domfe emphasized the detrimental impact of these global shocks on Ghana’s foreign reserves. He explained that the Bank of Ghana’s reserves were significantly depleted by August 2022, leaving the cedi vulnerable to speculative attacks and rapid depreciation. With dwindling reserves acting as a buffer, the cedi’s value plummeted against major currencies. By October 2022, the exchange rate had deteriorated to alarming levels, reaching GH¢15 to $1 on the interbank market and even GH¢17 to $1 on the forex market. This rapid decline in the cedi’s value further exacerbated inflationary pressures and contributed to the rising cost of living.
Dr. Domfe’s analysis underscored the interconnectedness of global events and their impact on national economies. He argued that the economic woes experienced by Ghana in 2022 were not unique, but rather reflected a broader global trend triggered by the confluence of the pandemic’s lingering effects and the Russia-Ukraine war. He highlighted the fact that several advanced economies, with presumably robust economic management systems, also grappled with record-high inflation rates during this period. This, he suggested, reinforced the notion that external factors, rather than internal mismanagement, were the primary drivers of the global economic downturn, including Ghana’s experience.
In conclusion, Dr. Domfe vehemently contested the narrative that attributed Ghana’s 2022 economic crisis solely to government mismanagement. He emphasized the significant role of external shocks, specifically the Russia-Ukraine conflict and its cascading effects on global commodity prices and supply chains. He further pointed to the depletion of Ghana’s foreign reserves, which left the cedi vulnerable to depreciation, exacerbating the economic challenges. Ultimately, he argued that the available data and the global economic context strongly supported the view that the 2022 crisis was primarily externally driven, impacting not only Ghana but also many other economies worldwide. He challenged critics to consider the broader global economic picture and refrain from simplistic explanations that solely blamed domestic policies for the complex economic challenges faced by Ghana.
