The Double Edged Sword of the Global Economy

‘Global economic crisis’ and ‘credit crunch’ are regular rhythmic mantras in the news and are often to be heard being chanted by politicians, employers, and by friends and family around kitchen tables.

Often times the tales of woe are linked to our own lives and experiences as recently we mourned the loss of Woolworths. Such mourning was for some relatively short-lived as they descend like vultures for the pickings of bankruptcy. The doubled edged sword of the credit crunch is that while Woolworths is no more, for a brief period we get some cracking bargains. Every cloud has a silver lining.

But what is happening elsewhere in places where there is no Job Seekers Allowance or National Health Service?

Is there also a double edge sword bringing good and bad, or does it just cut deeper?

How global is the Global economic crisis?

Introducing Hope

Hope is 35 years old.

She lives with her 5 children, all of who are under 10 years old. She also cares for her husband’s elderly mother.

Together they live in Sandema, in the Upper Eastern Region of Ghana.

Her husband left 3 years ago to find work in Ghana’s capital, Accra. For the last year she has not heard from him and he has not transferred any money to help feed and clothe his family.

Her income from subsistence farming is less than $1.50 (£1.00) a day; $10.50 (£7.10) a week. If Hope does not work then the family does not eat.

Although health insurance is only $12 (£8.10) a year per person, Hope cannot afford to participate in the government sponsored scheme.

image1.jpgHer three school age children attend the Joy School in Chuchuliga. This private school should cost $5 (£3.40) a month, but for the last 6 months Hope has not been able to pay.

This year Hope has noticed that the cost of living has risen significantly. A loaf of bread that sold at $ 0.80 (£0.54) in January 2008 is now selling at $1.80 (£1.21); a bag of rice 10 months ago was $20 (£13.50) now sells for $50 (£33.80); and a bag of maize that was sold at $40 six months ago now costs $75 (£50.70).

image2.jpgFrom July to February each year, Hope goes into the bush to harvest Shea Nuts. Working with other women from her village, they walk into the bush armed with buckets. When they find a tree one of the group climbs up to shake loose the fruit. After filling their buckets they return home to begin the hard task of peeling, boiling, drying and bagging the kernels before carrying them to market.

2007 was a good year for Shea Nuts and the price peaked at $50 (£33.80) an 80kg sack in Sandema. But this year the price has only sunk to an all time low of $15 (£10.15).

As Hope returns home from the local market, she wonders if she will manage to survive to keep her family together. She thinks about how one of her neighbours got so desperate she sold her eldest child into bonded labour. Would Hope have to do the same?

The doubled edged sword of the global economic crisis is cutting deeper into the lives of the poorest in our world...and for them there is no silver lining in the cloud, no rush to vulturise the bankrupt because they are already at the lowest point in the economic chain and so in the most vulnerable of states.

But why?

Why this sudden downturn in the Upper Eastern Region of Ghana where so much of life is geared around Shea Nuts?

The reasons are many and complex; and far away from the dry sun drenched landscape of Ghana. In simple terms, because the Europeans and Asians are not buying the Shea Nuts for export, then the market has collapsed. And the European and Asians are not buying because they cannot raise the capital to buy from the Banks. And the Banks are not loaning because…well one reason is the lack of trust which they themselves are now harvesting following years of unprecedented greed.

And who, at the end of the day suffers?

Hope and the 1000’s of women like her who are at the bottom of the economic chain, who if they do not work have no food for their children; no education to bring a better future; and no way of paying for their medical needs.

Trading Right

Since May 2008, Trade Right International has been working with Hope and around 1000 other women across 10 villages in the Upper Eastern Region of Ghana. Acting as Shea Nut agents, Trade Right International was to buy from the women then transport 100tonnes per week to the port of Tema, some 4 days journey to the south. There the load would be sold to the Asians and European exporters for the confectionary and cosmetic manufacturers. The harvest began with great hopes and excitement as the operating policy of Trade Right International is to return 50% of profits to carry out local development and aid work. Meanwhile those working with Trade Right International would decide which other poor communities would receive the remaining profit.

Based upon the 2007 figures, at the close of the harvest in February 2009, it was estimated that there would be around $135,000 (£91,200) profit to be split between local development and investment in other poor communities. But because the European and Asian exporters have not opened, the company has 50tonnes which it simply cannot sell without losing money.

Trade Right International are not the only company caught in this trap, the Ghanaian Coco Board has said recently that 2008 is an ‘unprecedented disaster for Shea Nut exporting.’ They have gone on to blame the lack of buying power by of the European or Asian buyers has been ‘precipitated by banks refusal to offer companies credit.’

Is there a solution?

A steady nerve and foresight are what is needed at this point in time. For Trade Right International this means seeking after investors and supporters who would be prepared to help them purchase and store the Shea Nuts until the market comes good again. This would not only be a wise investment opportunity, but would immediately help women like Hope survive intact without needing to sell a child into bonded labour.

webmaster posted the article on Thursday, 17th September 2009 at 7:21pm
Article updated on monday, 21st september 2009 at 7:01pm