Economist, Dr. Daniel Amateye Anim says Ghana’s inflation menace can only be fully addressed if the authorities complement the monetary policies with practical solutions.
Many economists often argue that the monetary policy tools used by the Bank of Ghana to control inflation have not been effective as expected. Analysts including Dr. Richmond Atuahene and Dr. John Kwakye have on different occasions and platforms called for a review of the Bank of Ghana’s inflation curbing policies.
For some time now, inflation has always spiraled out of control, missing set targets significantly despite the rigorous monetary policies of the bank. For instance, inflation ended 2024 at 23.8% despite a revised target of 18%.
The persistent rise in inflation has put many individuals and households into a cost of living crisis. With incomes staying, purchasing power continues to reduce, affecting the standard of living and pushing low-income earners into poverty.
Dr. Anim joins the school of thought that believes that the real solution to the country’s inflation woes lies in managing the supply and the cost side. He argues that Ghana’s inflation is mainly cost-driven and hence should be managed at the foundational level rather than solely depending on monetary policy tools.
In an interview with The High Street Journal, the economist contended that Ghana’s inflation is also a consequence of high production and operation cost. This includes soaring utility costs, high transportation fares, and expensive capital. These unfavourable conditions translate into the high cost of goods and services.
The economist therefore emphasizes that practical economic interventions are needed to tackle the cost and supply-side bottlenecks driving inflation.
Specifically, he is calling for pragmatic efforts to ensure reliable and affordable power supply to cost down the cost of power. He believes a more competitive and stable power sector would lower production cost for businesses, leading to lower prices for goods and services.
“How do we have a very competitive power supply at a competitive rate so that it will minimise the cost of production? The monetary policy, to some extent, is used when the situation is getting out of control, that is where they use it to tighten the situation. But to me, these are practical things that ought to be done,” he told The High Street Journal.
Dr. Anim stresses the need for strategic investments in road networks to reduce travel time and transport costs, especially for agricultural produce from rural areas to urban markets.
“How do you invest into your road networks to ensure that somebody who is going bringing something from the Central Region to Accra, will spend maximum 40 minutes, but will not spend three hours or four hours or more. All these mechanisms are some of the things will ensure inflation is reduced,” he added.
On the part of inflation emanating from high dependency on imports, Dr. Anim calls for boosting domestic production. He explains that Ghana can reduce its demand for foreign currency, strengthen the cedi, and limit imported inflation.
Already the new Governor of the Bank of Ghana, Dr. Johnson Asiama has signaled that he will review the monetary policies of the Central Bank. He further says he will integrate technologies such as Data Analytics and Artificial Intelligence (AI) in the fight against inflation.
But Dr. Daniel Anim warns against the over-reliance on monetary policies. He calls for a balancing act that combines monetary policies with practical economic policies. He urges policymakers to adopt long-term cost-reduction strategies, such as energy sector reforms and transport system improvements, to ensure sustainable economic stability.
