Ghana’s economy dominates tight election race

Accra – Over the last year, retired Ghanaian school master Richard Tagoe watched his life savings evaporate as Ghana renegotiated its debt in an IMF deal and slashed the value of his bonds.

For many like Tagoe, the management of the economy will be key when they vote on December 7 to replace President Nana Akufo-Addo who steps down after two terms in office.

The ballot has shaped into a tight race between Akufo-Addo’s ruling NPP party candidate and current Vice President Mahamudu Bawumia and former president and NDC party candidate John Mahama.

Akufo-Addo’s second term was marked by an acute economic crisis, inflation and weak currency that forced a $3 billion deal with the International Monetary Fund to manage Ghana’s debt load.

Many are still feeling the fallout.

“I worked all my life and saved for my old age, but now, everything is virtually gone,” 82-year-old Tagoe said. “How can we trust the government after this?”

An oil, gold and cocoa producer with a history of political stability, Ghana was an investor favourite. But the economic turmoil and a debt default dented the country’s appeal.

Inflation peaked at 54.1 percent in 2022 before easing to 23.2 percent by late 2023, but many Ghanaians still struggle with high costs, triggering sporadic protests over government policies.

A depreciating cedi currency and mounting poverty have further strained public confidence in their leadership.

Government’s attempts to raise funds through treasury bills have faltered, with investors shunning what they once considered a safe haven market.

“It will take time to rebuild public confidence in government securities,” Courage Boti, research lead at GCB Capital told AFP, refering to the government bonds under restructure.

“The restructuring was necessary for fiscal space, but the damage to trust is profound.”

In September, Ghana reached an agreement with international bondholders, negotiating a 37 percent haircut — a discount — on $13 billion of debt.

While hailed as a milestone, it marked the largest restructuring of African debt to date, underscoring the depth of Ghana’s crisis.

Divided electorate 

Security is also an election issue. Ghana and coastal neighbours Benin, Togo and Ivory Coast face spillover from jihadist conflicts over their northern borders in Burkina Faso and Niger.

Internal tensions have also been on the rise between NPP and NDC, especially over allegations of pro-government bias in key institutions like the Supreme Court and Electoral Commission.

But with the presidential election days away, economic management has become the defining issue.

New Patriotic Party (NPP) candidate Bawumia touts policies for stabilising the economy and growth in a bid for an unprecedented third term for his party.

But he struggled to separate himself from the government, with his track record as head of Akufo-Addo’s economic management team especially under scrutiny.

“The NPP cannot escape blame for the hardship,” said Mustapha Gbande, deputy general secretary of the opposition National Democratic Congress (NDC).

Former president Mahama, Bawumia’s main rival, promises a fresh approach.

Oxford Economics and other analysts have already tipped Mahama to win, citing voter dissatisfaction with the NPP’s handling of the crisis.

Cost of living 

At a bustling market in Kaneshie, a suburb of Accra, traders are quick to express disappointment with the economy.

“The price of onions has tripled, and customers just walk by without buying,” said Ama Asante, a vegetable seller.

Daniel Amateye Anim-Prempeh, an economist at Policy Initiative for Economic Development, said inflation was still having an impact on voters.

“The high cost of goods and services continues to burden households. Voters will factor this into their decisions,” he said.

Bawumia has highlighted improvements in macroeconomic stability, pointing to a rebound in growth to 5.8 percent in the first half of 2024.

“Ghana’s economy has come back to life after years of difficulty,” Finance Minister Mohammed Amin Adam told NPP supporters on the campaign trail.

But critics argue Bawumia’s policies lack innovation, dismissing them as repackaged old policies.

Mahama has pledged to renegotiate aspects of the IMF deal to free up resources for development, emphasizing youth employment, agriculture, and infrastructure.

“We cannot continue with business as usual,” Mahama said at a rally in the northern city of Tamale.

Recovery is still underway. Debt-to-GDP ratios remain at 84 percent, with the IMF projecting a reduction to 55 percent by 2028.

Growth is forecast at a modest 3.4 percent in 2024, and unemployment remains high.

For many Ghanaians, Saturday’s ballot is a test in the electorate’s faith in the system.

“I’ll vote for whoever can make life better,” market trader Serwaa said. “We’ve suffered enough.”