Ghana launches universal QR code for cashless transactions to curb COVID-19 spread

Ghana has introduced a new universal QR code system for cashless transactions in an effort to curb the spread of COVID-19 within the country. As part of its strategies to address the economic fallout caused by the pandemic, the central bank of Ghana has implemented various measures to stabilize the financial markets amidst the global crisis. Alex Boahen, Head of Research at Databank Group, discussed the impact of these initiatives on Ghana's financial sector in an interview with CNBC Africa. One of the key actions taken by the central bank was the reduction of the Monetary Policy Rate (MPR) by 150 basis points to 14.5%, aimed at increasing liquidity in the economy. Additionally, the bank lowered the bank reserve ratio by 2% from 10% to 8% and decreased the capital conservation buffer by 150 basis points. These measures were designed to ensure that banks have enough liquidity to meet withdrawal demands from clients and support small and medium-sized enterprises (SMEs). In response to the economic challenges posed by the pandemic, other countries like Nigeria have established funds to assist households and small businesses affected by the crisis. While Ghana has not yet introduced similar stimulus packages for the private sector, the government has allocated around $100 million to the Ministry of Health and the Ghana Health Service to combat the coronavirus outbreak. This funding will be used to procure medical supplies and other essential resources needed to address the health crisis. Despite the lack of direct financial support for businesses and individuals, there are concerns about the potential impact of a lockdown in Ghana due to the increasing community spread of the virus. With pressure mounting on the government to implement stricter measures, there is a growing need to address the economic vulnerabilities of the most affected populations in the event of a lockdown. In terms of currency performance, the Ghanaian cedi initially showed strength in January before the onset of the pandemic. However, the currency has faced pressure in the foreign exchange market, particularly from foreign investors selling off bonds and converting the proceeds into dollars to repatriate funds. This has led to a reversal of the cedi's gains earlier in the year and increased volatility in the bond market. The bond market in Ghana has experienced a significant uptick in trading activity, with total turnover surpassing last year's figures. Foreign investors hold a substantial portion of Ghana's bond market, contributing to the currency's fluctuation and impacting both domestic and international bond prices. As Ghana navigates the challenges posed by COVID-19, the resilience of its financial markets will be critical in mitigating the economic impact of the pandemic. In conclusion, Ghana's financial markets are undergoing a period of turbulence as the country grapples with the dual challenges of containing the virus and stabilizing its economy. The central bank's interventions and government initiatives will play a crucial role in supporting businesses and individuals through these uncertain times.