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Ghana Decides

The December 7 face-off in Ghana between the ruling National Democratic Congress and the opposition New Patriotic Party looks like being another close-run affair. The ruling NDC is defending an awkward economic record. All the key economic metrics including sluggish growth and rising inflation, public sector and current account deficits are hugely problematic for the NDC after eight years in power. Admittedly, the government has had some success in defraying a significant portion of the blame to global circumstances. But while, for example, the post-2013 slide in commodity prices has been a significant headwind, the government fundamentally mismanaged the situation by not reigning in its expenditures accordingly. The almost inevitable IMF bailout, in exchange for fiscal sobriety, has helped to steady the economy somewhat. Nonetheless, the last few years have shattered the NDC’s standing for basic economic competence and a willingness to take unpopular decisions that may nevertheless be in the long-term interest of the nation. much of the recent high-frequency survey releases suggest that Q4 growth is set for a similar outturn.

The NPP has pushed the private sector as a growth driver. Not surprisingly, the NDC has tried to shift the electoral debate away from the economy and towards a straight choice between its charismatic leader, John Mahama, and the NPP’s ostensibly more technocratic and less populist Nana Akufo-Addo, who is hoping that his third consecutive challenge for high office will be luckier than his previous efforts. But the NPP has also proposed some classic pro-business ideas, including cutting business taxes as well as import duties on raw materials and machinery in order to spur the expansion of Ghana’s manufacturing sector and create much needed employment. Such policies have gained increasing traction among an electorate which has become wary of the NDC’s focus on Public-Private Partnerships as a key growth driver, especially given a raft of high-profile corruption scandals involving state enterprises and NDC officials.

High chance the result will be contested. There are five other candidates running for presidential office and, according to the Electoral Commission of Ghana, the result is expected by the morning of Friday 9 December. A candidate who receives more than 50% of votes cast will be the outright winner. Otherwise, the top two protagonists will enter a second round run-off as in 2000 and 2008. In 2012, the NPP contested the result, which gave the NDC 50.7% compared to the NPP’s 47.7%, through the courts on the grounds of voting irregularities. A similarly close declaration this time around could also prompt judicial appeals. In any case, widespread disaffection with the NDC’s handling of the economy underscores our expectation that the NPP will emerge victorious. However, this is the year for voter broadsides against conventional wisdom.

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