Market News

By Yinka Ibukun and Ekow Dontoh

(Bloomberg) -- Ghana’s government has overseen a restructuring of most public debt, secured a $3 billion International Monetary Fund bailout and rebooted the West African nation’s economy. That probably won’t be enough to spare the ruling party and its presidential candidate from defeat in Saturday’s election. 

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While the healthier state of the national balance sheet has cheered investors, with Ghana’s bonds among the best performers in emerging markets since the debt revamp in October, there’s been little good news for its 33 million people. The cedi has depreciated 60% against the dollar since the start of 2022, living costs and interest rates have soared and businesses are struggling under the weight of new taxes that were agreed to as part of the IMF deal. 

With President Nana Akufo-Addo stepping down after serving two terms, his deputy Mahamudu Bawumia was named as the ruling New Patriotic Party’s flagbearer and will likely inherit blame for the economic hardship. His main rival is John Mahama, a former president who heads the National Democratic Congress.  

Power has rotated like clockwork between the two parties every eight years for more than three decades. The NPP garnered 51% support in 2020, down from 54% four years earlier, after falling short on a pledge to tackle graft and undertaking a banking sector cleanup that cost the state about $1.9 billion and led to the closure of hundreds of financial institutions and thousands of job losses. Environmental damage caused by illegal gold mining has also raised concern.

A poll of 2,623 people conducted last month by Accra-based Global InfoAnalytics Ltd. showed 52% backed Mahama and 41% Bawumia. In September, New York-based Eurasia Group said there was a 65% chance of a Mahama victory, up from 60% three months earlier. 

There is a strong anti-incumbent sentiment that “positions the former president as the frontrunner to secure the presidency,” Eurasia said in a note to clients. Mahama would also benefit from apathy in ruling party strongholds where voters are struggling economically, said Amaka Anku, who heads the political risk consultancy’s Africa practice.

While 10 other candidates including former Trade Minister Alan Kyerematen and real estate developer Nana Kwame Bediako are also vying for the top job, none has a realistic chance of winning. 

“At every election, people say they wish there was a viable third force, but no one has invested in building one,” said E. Gyimah-Boadi, the co-founder of research organization Afrobarometer. 

A former public relations professional, Mahama, 66, served as president from July 2012 to January 2017 — a tenure that was marred by an economic downturn and widespread electricity shortages. He’s pledged to renegotiate the terms of the IMF bailout to smooth out debt payments and reduce the tax burden on companies so they can create more jobs, spearhead a private-sector-led $10 billion infrastructure investment program and support some businesses to operate around the clock. 

Bawumia, 61, a former deputy central bank governor who has served as vice president since 2017, has undertaken to improve the delivery of government services through a digitization drive and boost the agriculture and mining industries. Ghana is the world’s second-largest cocoa grower and Africa’s biggest gold producer.

Whoever wins the vote will need to tackle a slump in living standards and 30% unemployment rate among workers who are younger than 24. 

“Ghana and its electorate need a pragmatic government that works together with the IMF to reboot the economy in a fiscally efficient and equitable manner,” said Simon Quijano-Evans, chief strategist at Gramercy Ltd. in London. “Everything else will then start to fall in place.”

Gross domestic product expanded 5.8% in the first half of this year, up from 2.8% in 2023. That’s still lower the levels of at least 6% recorded between 2017 and 2019 — prior to the onset of the global pandemic.

Regardless of who wins, “the president will have to make a lot of painful decisions” to retain support from the IMF, said Godfred Bokpin, an economist and finance professor at the University of Ghana.

Seidu Morro, 47, a mechanic and father of seven, sees little to choose between the leading contenders and accuses successive administrations of failing to create enough decent jobs or fostering an enabling environment for small businesses to flourish.

“I will not waste my time to go and stand in long queues to vote again,” he said while sitting alongside his two workers on a bench in his workshop in Accra, the capital. “Our customer base has drastically shrunk because the prices of the imported spare parts have become so expensive.”

--With assistance from Colleen Goko, Jorgelina do Rosario, Thomas Hall, Paul Richardson and Arijit Ghosh.