Ghana’s recent economic crisis not only affected the finances of the government, but it also took a heavy toll on most of its vulnerable citizens.
The World Bank reveals that soaring inflation alone, occasioned by the crisis, pushed more than 800,000 Ghanaians into poverty.
The 9th Ghana Economic Update released by the World Bank Group reveals that by 2023, the poverty rate had climbed to 40 percent, up from 39 percent in 2017, representing about 800,000 Ghanaians.
This means households struggled with skyrocketing food prices, transport costs, and general inflation that eroded already fragile incomes. Sadly, for many families, even earning US$3 a day was no longer enough to meet basic needs.
“The crisis disproportionately affected the most vulnerable segments of the population, with poverty (defined as living on US$3 per day, 2021 purchasing power parity) rising to 40 percent in 2023, up from 39 percent in 2017, due to slowed economic growth and high inflation. The inflation shock alone pushed over 800,000 Ghanaians into poverty,” the report revealed.
However, the World Bank revealed that 2024 brought some relief. Stronger economic growth helped reduce the poverty rate slightly to 39.6 percent, reversing part of the earlier damage.
Despite the rebound, the Bank cautions that the improvement remains fragile. Many of Ghana’s poor work in agriculture and small-scale services, sectors that are still growing too slowly to create secure, well-paying jobs.
Persistent high inflation continues to eat away purchasing power of the vulnerable households, threatening to undermine further gains.
At a broader measure of poverty, the report says those living on less than US$4.20 a day, which is an estimated 57.2 percent of Ghanaians, remain poor in 2024, highlighting the weight of the challenge.
“Robust economic growth in 2024 reversed this trend, reducing poverty to 39.6 percent. Despite this improvement, modest growth in sectors like agriculture and services, where many poor and economically insecure individuals are employed, coupled with persistent high inflation, continues to erode household purchasing power and threaten further poverty reduction,” the bank said.
It added, “The poverty rate at the lower-middle-income country (LMIC) poverty line (US$4.20 per day, 2021 purchasing power parity) remains high at an estimated 57.2 percent in 2024.”
The World Bank says the key issue is not just growth, but the quality and structure of that growth. Too many industries in Ghana remain capital-intensive, using machines rather than creating jobs for the country’s expanding working-age population.
Without structural reforms to generate large-scale, productive employment, poverty reduction will remain slow, even with strong economic growth.
For the Bank, transforming the structure of Ghana’s economy and creating more opportunities for decent work is crucial if poverty is to fall meaningfully and sustainably.
