What are COVID-19’s implications for Ghana’s entrepreneurs and private-sector workers? Featured

Gathy Faidoo, chief executive of Pauligath, a Ghanaian clothing line, has had to send her staff home because of the lockdown imposed on Kumasi and Accra, the two main cities in Ghana.

“I paid them for the month of March and sent them home until further notice,” Faidoo says.

Like many other business owners, Faidoo has had to halt operations, losing revenue in the process. She has resorted to marketing her old stock to help keep her afloat during this period. She has no income coming in and cannot afford to pay the five staff who work for her. She will struggle to pay the retainer on her company premises as long as parts of the country remain on lockdown.

Prospects of a squeeze

However, Faidoo is one of the “lucky” few who have a day job and can rely on a salary to feed themselves as long as their employers continue to pay them. She hopes that when the ban on restrictions is lifted, she can inject some money from her salary into her business to grow it again.

Life for Francisca Owusu-Baafi, however, is different. Unlike Faidoo, she has only one job, as a nursery teacher at a small private school in Tema. She received part of her salary for the month of March but is unsure whether she will be paid at all for April, or May, and wonders how she will feed her family.

Owusu-Baafi represents a large group of people who work with private businesses in Ghana and may be facing job losses, should the lockdown continue. Some private companies have already suggested that they will slash salaries for workers, should the lockdown carry on indefinitely.

“We have been out of school for a month now and so cannot afford to pay salaries if we don’t have income,” says Magdalene Gyasi, proprietor of a school in Ashaley Botwe, in the northern suburbs of Accra. “If the lockdown continues, we will have to let some of our staff go.”

Threat to jobs

Ernest Kofi Abotsi, the immediate past dean of the law school at the Ghana Institute of Management and Public Administration (GIMPA) in Accra, has said that employers can terminate employment contracts under the present circumstances without any criminal or civil consequences, as the coronavirus pandemic is a naturally occurring event.

Speaking on Joy FM’s Newsfile, Dr Abotsi however noted that in such situations most businesses decide to suspend contracts and offer part payment to their employees. For those whose services are not considered essential and who have no “special talents”, their jobs will probably hang in the balance during the period of restrictions and they may eventually find themselves out of work.

The International Labour Organisation estimates huge losses across income groups throughout Africa. It projects that there will be an increase in global unemployment in 2020 and that the resulting job losses may possibly exceed the ILO’s initial projection of 25 million people. In Ghana, where many people are in low-paid and low-skilled jobs, the job losses may be even more devastating.

Crisis upon crisis

The website of the Ministry of Labour and Employment Relations reports that, as of August 2019, there were a little over 800,000 unemployed people in Ghana. Some of these people have taken to various forms of informal activity to make ends meet.

The banking crisis that hit Ghana in 2019 led to job losses elsewhere in the financial services industry, as well as losses for people who invested in banks and other microfinance institutions which failed. Although the government rolled out compensatory measures for those affected, the payments stopped abruptly when the partial lockdown began.

“I lost a huge amount of money during the banking crisis,” says Ama Owusua Boateng, a business owner in Adum, Kumasi. “Most of us here save at First Allied Bank and it was one of the banks that got affected during the crisis.”

Before the lockdown, Boateng travelled frequently between Ghana and China to get stock for her business in men’s and women’s fashion accessories. She had managed to secure loans to upscale her business. With the closure of Ghana’s borders, business has stalled and she fears she may default on her loan repayments.

She also anticipates that when all this is over, she may not be able to purchase goods at the same prices as she could obtain them before the coronavirus outbreak, and so she will need financial support to increase her capital.
Without the intervention of a third party when COVID-19 is past, people like Boateng will probably go out of business.

Government intervenes

Some governments around the world have taken measures to mitigate the economic effects on business once the pandemic is over. The UK government, for example, will pay the salaries of employees who find themselves unable to work because of the pandemic. Among other measures taken in the United States, the government has expanded unemployment benefit, paid sick leave for workers affected by COVID-19 and made $500 billion in direct payments, including over $1,000 to every adult in the US, excluding millionaires and billionaires.

In Ghana, which has neither the social protection policies nor a strong business capacity, the government has set up the COVID-19 Emergency Response Fund to perform a similar function. The processes that organisations and companies will have to go through to access funding are yet to be mapped out, however.

Nonetheless, experts believe that these measures may be insufficient and may not reach all businesses, particularly the small-scale enterprises struggling hardest to ride out the pandemic. Ghanaian governments have made minimal interventions to support entrepreneurs in the past, and they have generally been unable to meet the needs of business.

Relief for all?

Alex Frimpong, the chief executive officer of the Ghana Employers’ Association, has proposed that the government adopt a more universal approach, so that a much larger number of people benefit from state interventions. Frimpong proposes that the government suspend VAT and income tax to ease the burden on business brought about by the outbreak of the epidemic.

Others have proposed sending money to citizens through all registered mobile money businesses in Ghana. But this may be inefficient, because the country has neither adequate information nor the ability to determine quickly which individuals need it most.

The government has however made the first steps towards universal reliefs, taking on the full cost of water and committing itself to pay half the cost of electricity for the average household consumer/citizens over the next three months. Although these measures have had their fair share of problems in the implementation, one thing is certain: a tax cut will be welcome news to entrepreneurs.

“It will be great to have a tax holiday post COVID,” says Owusua Boateng. “I can’t even begin to describe how that will help my business.”

Rate this item
(1 Vote)
Last modified on Sunday, 19 April 2020 20:09

9 comments

  • my link here
    Comment Link my link here Sunday, 24 May 2020 17:03

    I cling on to listening to the news bulletin speak about getting boundless online grant applications so I have been looking around for the best site to get one. Could you advise me please, where could i acquire some?

    Report
  • best cbd oil companies
    Comment Link best cbd oil companies Friday, 22 May 2020 17:47

    Amazing issues here. I am very happy to look your post. Thank you so much and I'm having a look forward to touch you. Will you please drop me a mail?|

    Report
  • business consultancy
    Comment Link business consultancy Monday, 18 May 2020 02:28

    Wohh precisely what I was searching for, appreciate it for posting.

    Report
  • Bank and finance
    Comment Link Bank and finance Sunday, 17 May 2020 23:45

    It's a shame you don't have a donate button! I'd certainly donate to this outstanding blog! I guess for now i'll settle for book-marking and adding your RSS feed to my Google account. I look forward to brand new updates and will share this site with my Facebook group. Chat soon!

    Report
  • diamond 7 casino
    Comment Link diamond 7 casino Friday, 15 May 2020 21:17

    You made some decent points there. I looked on the internet for the subject and found most persons will agree with your site.

    Report
  • best cat food wet
    Comment Link best cat food wet Friday, 15 May 2020 06:02

    Hey are using Wordpress for your blog platform? I'm new to the blog world but I'm trying to get started and set up my own. Do you need any html coding knowledge to make your own blog? Any help would be greatly appreciated!

    Report
  • go to my site
    Comment Link go to my site Friday, 15 May 2020 00:19

    I am really enjoying the theme/design of your weblog. Do you ever run into any web browser compatibility issues? A couple of my blog audience have complained about my site not operating correctly in Explorer but looks great in Safari. Do you have any solutions to help fix this problem?

    Report
  • erjilopterin
    Comment Link erjilopterin Saturday, 09 May 2020 22:54

    I have not checked in here for some time because I thought it was getting boring, but the last several posts are great quality so I guess I will add you back to my everyday bloglist. You deserve it my friend :)

    Report
  • smoretraiolit
    Comment Link smoretraiolit Friday, 08 May 2020 20:51

    I want reading through and I believe this website got some genuinely useful stuff on it! .

    Report

Leave a comment

Latest Tweets

NPP CONDEMNS POLICE ATTACK ON LAW STUDENT PROTESTERS: The New Patriotic Party yesterday condemn... https://t.co/axawaALrgn
“GHOST OF SADA” HAUNTS MAHAMA: NORTHERN DEVELOPMENT AUTHORITY EXPOSES ROTTEN $9.5M TRICYCLE DEAL: https://t.co/RA9a4fhTtY
PRESIDENT LAUNCHES NATIONAL PLAN FOR FIGHTBACK AGAINST PLASTIC WASTE: With plastic pollution be... https://t.co/ZAwJ4LRh5Q
Follow The New Statesman on Twitter