May 13, 2015 / 11:12 AM / 5 years ago

Ghana power blackouts add to nation's economic woes

* President vows to fix energy crisis

* Some investors unconvinced by recovery plan

* Firms struggle due to outages, currency slump

By Matthew Mpoke Bigg and Kwasi Kpodo

ACCRA, May 13 (Reuters) - Joseph Nyame was doing very well as senior plant operator at the Sha-Sha Natural Fruit Juice company near Ghana’s capital Accra until a wave of power cuts forced the firm out of business.

Now Nyame makes his living on the street, selling cheap Chinese plates to office workers, a victim of the West African nation’s energy crisis. His dreams of getting ahead are on hold, he said, as he unpacked plates in the small house he rents with three other families.

“My heart is not in what I am doing,” Nyame told Reuters. “I’m a shift leader at the plant and that’s what I do best. But I have to look after the family so anything goes for now.”

Economic growth in Ghana, once a favourite of investors in Africa, has been slowed by a fiscal crisis that has forced the government to seek International Monetary Fund support and undermined its reputation abroad for financial management.

But it is the energy crisis that has most sapped business confidence at home and angered ordinary Ghanaians ahead of elections due next year.

Blackouts are a failsafe way to raise a nation’s blood pressure. In Ghana, they last for up to 24 hours, plunging homes into darkness and cutting off fridges, TVs, water pumps and fans. Costs for those who can afford generators have soared.

The frequent outages have acquired bogeyman status and the slang word for power cut in the local Twi language, “dumsor”, is the subject of comedy skits, protest marches, and a hashtag campaign, #DumsorMustStop.

The blackouts have become a symbol of Ghana’s abrupt downturn just a few years after it started producing oil in 2010, making a nation that already exported gold and cocoa one of the hottest growth markets in Africa.

Restoring reliable power is critical for President John Mahama ahead of next year’s election. Discontent over power and the economy could tip the balance in favour of opposition leader Nana Akufo-Addo, whom Mahama narrowly beat in 2012.

The government says Ghana has a long term problem generating enough power given that demand is growing at 10 percent a year, but that argument has failed to soothe voters, prompting Mahama to take personal responsibility for solving the problem.

He created a Ministry for Power in November and aides say he is involved in the details of electricity generation.

“I, John Dramani Mahama, will fix this energy challenge,” he said in a state of the nation address in February.


Restoring power may prove no easier than stabilising an economy beset by debt of nearly 70 percent of GDP, a stubborn budget deficit and a weak currency. The cedi is down one-fifth this year after falling 31 percent in 2014.

“Ghana’s debt problems are very severe .... It is not easy to achieve a turnaround,” said Razia Khan, head of Africa research for Standard Chartered bank.

Ghana agreed an aid programme with the IMF in April but economists say pressure on the cedi shows investors remain unconvinced. They also cite a 400 million cedi ($103 million) domestic bond sale that was open to foreign investors but which was undersubscribed despite the IMF deal.

A senior African banker, who asked not to be identified, described Ghana as a “basket case” economy and said his major international bank would not invest there in the near future.

Deputy Finance Minister Cassiel Ato Forson told Reuters the government has a clear plan to improve the economy and that prospects were bright, not least given the influx of revenues to come from new oil and gas fields set to open by 2018.

Ghana is also on course to deliver more than 3,000 megawatts of additional power over the next five years, he said.

In the short term, that will include emergency power generation by General Electric, as well as two floating power barges from Turkish company Karadeniz Energy Group.

In the meantime, people like Nyame have suffered more than just the inconvenience of televisions going black mid-programme or nights without fans in stifling heat.

Sha-Sha is part of the Shaaba Group, a Ghanaian company that has laid off more than 200 workers to avoid closure. Local firms on fine margins are most at risk but international companies have also been hit by raised energy costs and higher import prices due to the currency’s fall.

Morgan Stanley has cut its 2015 growth forecast for Ghana from 5 percent to 3 percent due to the power cuts.

Many local firms operate at half capacity to offset the cost, said Adjei-Baah, head of the Ghana Chamber of Commerce.

“The fear is that they may collapse by December if this power crisis is not solved,” he said. (Editing by Catherine Evans)

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