Projections and commitments from Ghana’s eloquent political class and the human resources offered by its vibrant young population – forecast to reach 29m in 2018 – drive optimism that a sub-Saharan success story can generate sustainable growth to move its economy beyond lower middle-income status. Following their December 2016 election victory, President Nana Akufo-Addo and his New Patriotic Party (NPP) government have struggled to turn around a legacy of debt and alleged malfeasance by their National Democratic Congress (NDC) predecessors. Unemployment stands at just under 5%, according to the International Monetary Fund (IMF) and World Bank, but with inflation at 11.8% in 2017, the influential Trades Union Congress is looking for big wage rises.
After a difficult transitional year, much is expected from the government’s agenda to promote education, jobs, and agricultural support policies. Before Ghana’s electoral cycle turns back towards elections in late 2019, now is the time for Akufo-Addo to deliver (AE 350/6).
Investors are encouraged by data showing that GDP, which grew by 3.5% in election year 2016 and 5.9% in 2017 (when it stood at $45.46bn), should grow by 8.9% in 2018 and nearly 6% in 2019, according to IMF forecasts. Finance minister Ken Ofori-Atta’s figures differ, but he predicts at least 6% growth this year as he works to reduce a worrying debt burden. The IMF sees total investment rising from 13.7% of GDP in 2017 to 17% in 2020. An ambitious investment promotion programme envisages aluminium and steel production and gas-fired petrochemicals, along with small-scale agro-industry, which should create jobs and add value to primary products.
The Jubilee field has had problems at its floating production vessel, but following a ruling on the border dispute with Côte d’Ivoire in September, the Tweneboa-Enyenra-Ntomme (Ten) field is slated for expansion (AE 357/3). Increased gas output will feed some of the many proposed power projects. Eni’s gas-rich Sankofa oil field started production last May. With oil and gas still in the ground, and companies including Hess and ExxonMobil looking even further offshore, Ghana can look to considerable upside.
Not only must Akufo-Addo deliver on his ambitious social and economic agenda to benefit all Ghanaians, he must also show his much-vaunted anti-corruption campaign is more than a means to discredit NDC rivals. An Office of the Special Prosecutor has been created with a mandate to investigate and prosecute cases of alleged corruption under the Public Procurement Act and other corruption-related legislation. In an unusual development, former NDC attorney-general Martin Alamisi Amidu was named special prosecutor on 11 January. The government is reviewing procurement contracts, including 28 thermal power purchase agreements (PPAs) signed under the NDC (AE 360/15). Compromising evidence may come to light, but ministers have also said contracts that did not involve malfeasance may be rescinded, potentially costing hundreds of millions in payments to disappointed developers.
The opposition NDC has countered by questioning NPP bond issues (AE 356/20) and fuel supply contracts. It was also critical of Akufo-Addo’s effusive welcome for Russian giant Gazprom’s agreement last September to supply liquefied natural gas for regasification at Tema, which the president said was testament to his government’s efforts to encourage private sector participation.
Even where malfeasance is not involved, consumers and investors could do with greater clarity around the welter of independent power projects and other schemes. Insiders say progress is being made, with recognition that, confronted with an electricity supply crisis, Ghana signed too many PPAs in the 2012-16 period (AE 355/7). There is as yet no decision on the proposed international management contract to run stuttering Electricity Company of Ghana (ECG), but moves towards more rational planning are suggested by Ghana Grid Company’s updates of generation and master plans (AE 358/9). Meanwhile, ECG remains dependent on solutions such as Turkish supplier Karpowership’s floating units (AE 353/1). While Akufo-Addo’s agenda has much to admire, the NPP’s ability to deliver will determine whether it can take Ghana to another level.
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