2020 has been one heck of a year. It was meant to be the beginning of a new decade with fresh optimism and hope of better things to come. But then it had its own plans and that plan was delivered in the shape of a global pandemic called COVID-19.
Since the arrival of the pandemic, businesses have been hit significantly but then also these businesses, across all sectors and regions, have shown how resilient they are to anything including a pandemic.
The highly experienced journalists in the Business and Financial Times’ (B&FT) newsroom took time out to review the year across sectors and regions. Enjoy the read.
Pandemic redefines and digitises the economy
By Obed Attah YEBOAH
It all began as a bright year. Hopes were high in almost every sector that this year would be better and bigger. And yes, it started as such. Government had projected in its 2020 budget that the economy would grow at 6.8 percent – attesting to the fact that everyone was bullish about the year.
But then, a certain novel disease that came to be known as the coronavirus reared its ugly head. Initially it started in China, and so it was thought to be far away; hence, its probability of affecting the economy negatively wasn’t envisioned to be great. Gradually, the disease was declared a global pandemic and Ghana recorded its first case on March 12, 2020. At once, everything changed.
The pandemic ravaged every sector of the economy. All economic activities literally came to a standstill. Within the twinkle of an eye, everything was lost. Now the economy that was expected to grow at 6.8 percent at the end of year, has fallen into recession as of end third-quarter. Overall growth is now projected at 1.9 percent. Yes, that is how seriously the pandemic has decimated the economy.
But the situation is not entirely negative, as the pandemic has also awakened our senses to embrace digitisation. Today, most people have resorted to doing business online and electronically rather than the old-fashioned style of human-to-human contact. And this is positive, as it is driving the country’s digitisation agenda.
And for especially the financial sector, the new normal has really come to solve a problem. Despite disruption caused by the pandemic, the May 2020 banking sector report showed an astronomical jump in demand for banks’ digital services. Due to the surge in use of electronic banking services, net fees and commissions grew impressively by 16 percent from the 3.6 percent recorded in first quarter of last year – signalling a new window of opportunity for banks.
The stay-at-home orders, social distancing and other protocols brought by the pandemic have awakened customers’ desire to limit the use of cash in their business transactions, as well as their frequent movement and visits to banking halls.
Thus, a risk management expert, Francise Owusu-Acheampong, says the banking industry stands a better chance of keeping profit margins up if it remains alert to the opportunities brought by the pandemic.
“There is a future for the industry as well as associated risks…the pandemic is opening our eyes to other avenues that we have not exploited to the full. From my perspective, I think the pluses will be more than the minuses. The most important thing is to identify the risks and manage them well, and then you can get residual profits out of them.
“So, the increase in mobile banking and other electronic platforms show there are a lot of pointers to a growth trajectory that any serious bank should begin to look at and see what they can make out of these opportunities,” he told B&FT in an earlier interview.
Besides the banking sector report that gives positive signs the pandemic has forced people to embrace digitisation, statistics from the largest payment systems platform, Mobile Money, offers an even better testimony.
The Summary of Macroeconomic and Financial Data (September 2020) published by the Bank of Ghana shows that the mobile money interoperability platform – which makes it possible to transfer money not only to different mobile networks but also to banks, E-zwich cards etc. and vice versa -saw its transactional value hit GH¢685million, representing a more than 940 percentage points increase from the GH¢65.7million recorded same period last year.
The point is even more clear when the data are backdated. The very month (March 2020) the coronavirus disease was first recorded in the country, transactions on the mobile money interoperability platform jumped 31.4 percent.
Prior to this, the interoperability platform recorded a contraction of 1.6 percent and 2.5 percent in January and February respectively; indicating that most consumers were still comfortable with using hard cash for their business transactions. However, the sudden appearance of coronavirus on March 12 automatically changed the status quo, as many – especially the educated and elite class – resorted to cashless transactions for fear of contracting the disease through the exchange of hard cash.
The change in consumer behaviour also reflected in the number of transactions recorded on the interoperability platform. The number of transactions increased to 4,580,000 in August while that of March was 1,987,000; signifying a 130 percent growth compared to a 2 percent decline in February.
The data further shows an increase in active mobile money accounts to 15.9 million in August from 14.8 million in March. The number of active agents also increased to 280,000 from 239,000 within the stated period.
All these point to one direction: the people, including those in the informal sector, have finally embraced the idea of going electronic or digital, and this has set the stage for the economy to take off well post-pandemic. So in the coming year – 2021, it is expected that measures introduced by government and the private sector’s own strategies to hit the ground running following a difficult year, and will work for the economy to return to its pre-pandemic growth path.
Impact on agriculture
By Lawrence SEGBEFIA
According to data published by the Ghana Statistical Service (GSS), household incomes in Ghana have been severely hit by the COVID-19 pandemic.
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