Simulations of Policy Responses and Interventions to Promote Inclusive Adaptation to and Recovery from the COVID-19 Crisis in Ghana

Abstract

We assess the impact of COVID-19 shocks on household welfare and the effectiveness of select policies implemented to reduce their impact on welfare in Ghana. We adopt a microsimulation approach to assess the effects of COVID-19 on household welfare. Welfare fell by 34.2% to 41.9% between March and June 2020. Over the same period, the poverty headcount and the Gini index increased by 9 to 10.5 percentage points and 0.4 to 0.6 points respectively. The number of poor people increased by 2.8 to 3.2 million. The hardest-hit sector was education, with agriculture, forestry and fishing, trade and repairs, manufacturing, and other services also affected. The effects vary for men, women and children. While women experienced the largest decline in welfare, men experienced the highest increase in poverty incidence. The three policies selected reduced poverty marginally but were unable to offset the increase in poverty that occurred between March and June. The estimated cost of the three policies is GHS3.7 billion excluding administrative costs, which equates to approximately 1% of 2020 GDP.