Life without remittances in Ghana

HO, Ghana — The sidewalk in front of Ghana Commercial Bank is not where Godwin “Romeo” Dagadu expected to find himself.

He needs a loan to help him stay in school. He wants to be a banker some day. His mother is here, to co-sign the application.

Gone are the days when his father, who moved to the United States, would wire a few hundred dollars every once in a while, which he put toward school fees.

His father lost his factory job in Minnesota and moved to South Africa, where as a teacher he’s not earning enough to send money home.

Even in this tiny city 95 miles northeast of Accra, it’s hard to find shelter from the global financial crisis.

“I called him a week ago for my fees,” said Dagadu, 28. “He lamented but because he doesn’t have it he can’t do anything. He made a promise that maybe by June he’ll be able to raise something and send it.”

His younger brother, Linus, was forced to drop out of school six months ago “because no more remittance from our dad. No good jobs here for us to do to raise such money. He’s just a liability in the house now.”

Ghana has some liabilities of its own, beginning with the government’s deficit spending. The administration of new President John Atta Mills, who took office in January, says the budget deficit is 14 percent of GDP, much worse than former president John Kufuor’s estimate.

The World Bank called Ghana’s deficit “worrisome.” It’s largely the result of employee wage hikes and electricity subsidies. That will mean hard decisions about government spending this year. Mills’ finance minister said this week they want to reduce the deficit to 9 percent by year’s end.

Despite the problems, Ghana still has one of the strongest economies in sub-Saharan Africa.

Ghana is the world’s second-largest cocoa producer and still hopes to increase output by more than one-third to 1 million metric tons. Also, Cadbury Schweppes says it is standing by its 10-year $40 million program to improve Ghana’s cocoa farming communities.

Revenue from Ghana’s biggest export, gold, was $2.3 billion last year, representing a 28 percent increase over 2007 as investors sought safe havens, and likely will do the same this year. Ghana is Africa’s second-largest gold producer.

And while the United States and other developed nations rely on gigantic spending plans to stimulate their economies, Ghana looks forward to new revenue from oil discovered offshore in 2007. Pumping begins next year and Ghana’s cut of the revenue should exceed $1 billion annually.

During a financial pinch, people spend less on entertainment, and Ghana’s tourism industry hasn’t been spared, according to the Ghana Association of Travel and Tourist Agents.

“People are not too sure if they want to spend their last penny on fun,” said Hillarius McCash Akpah, GATTA’s vice president. “People were trying to be extra careful where they spend.”

Ghanaians living abroad comprise about one-third of the international arrivals annually, but McCash Akpah said many of them stayed in the U.S. or Europe during December.

“Ghanaians themselves were not even coming for holiday,” he said. “Usually you have a lot of people coming in to celebrate Christmas here. This time around very few of those cases were registered.”

And economists predict Ghanaians living abroad will send home less money than they have in past years. Remittance to Ghana in 2007 was $1.6 billion, more than overall aid from donor countries.

Romeo Dagadu, the student looking for the loan to stay enrolled at the Ghana Institute of Management and Public Administration, hopes things improve soon. Even if he gets his $1,250 loan, he’ll still have to pay a late-registration fee at the school.

“It’s been a very tough year,” he said.

More GlobalPost dispatches from Ghana:

Democracy wins in Ghana

Ghana gushing with optimism over oil