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AFRICA RISK CONSULTING Ghana Monthly Briefing December 2020

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AFRICA RISK CONSULTING Ghana Monthly Briefing December 2020 AFRICA RISK CONSULTING Ghana Monthly Briefing December 2020 Ghana Summary 17 December 2020 President Nana Addo Akufo-Addo (2017-present) secures a second four-year term in a tight presidential election but without a majority in parliament and his opponent, former President John Mahama (2012-2017), refusing to concede defeat. Economists are divided in opinion on how the current uncertain political environment will impact economic activity and local and foreign investment in the country. The election was largely peaceful but marred by patches of violence during counting and collation of results, with six recorded election-related deaths. Akufo Addo wins re-election, opposition claims fraud Ghana’s Electoral Commission (EC) announced on 9 December that President Nana Akufo-Addo (2017-present) of the New Patriotic Party (NPP) had secured 51.59% of the valid votes cast in presidential polls held on 7 December, beating his opponent and predecessor, former President John Mahama (2012-2017) of the National Democratic Congress (NDC) who obtained 47.366%.1 Mahama has rejected the election results, describing them as “fraudulent”, and has vowed to take up a legal battle. ARC’s sources in Ghana say there is a tense atmosphere in the country as the nation awaits the next move by the opposition NDC – although the election was largely peaceful. The two major parties failed to gain an absolute majority in the country’s 275-seat parliament, with the NDC wiping out of the NPP’s 63-seat majority. The ECC announced on 17 December that the NDC won the remaining seat to be counted in the legislative elections, Sene West, matching the ruling party’s tally and creating a hung parliament. A hung parliament is likely to hamper Akufo-Addo in making decisive policies, particularly regarding the stumbling economy. The ruling party’s parliamentary losses may not end there: the NDC are disputing the outcomes of three seats, one of which, Techiman South, analysts expect will be overturned.2 Akufo-Addo, shortly after being declared winner of the presidential election, delivered a victory speech in which he said his “immediate task will be to begin the process of reversing the effect of Covid- 19” and restoring Ghana to one of the fastest-growing economies in the world.3 Akufo-Addo has formed a 15-person transition team with many familiar faces, led by chief of staff Frema Osei-Opare, to continue with his policies.4 Many Ghanaians on social media shortly after the transition list was released called for the sacking of senior minister Yaw Osafo Maafo, whom they blamed for the NPP’s poor election result due to corruption allegations over a $1m procurement contract he signed in 2017 with United Kingdom-based consultancy Kroll and Associates, which was later brushed aside in court.5 This makes a slim parliamentary majority by the opposition likely, which would gridlock Ghanaian politics. The opposition blames its loss on collation errors and claims military involvement suppressed votes at some collation centres.6 Under Ghanaian law, a losing candidate can challenge presidential results within 21 days of the electoral body declaring results at the highest court of the country, the Supreme 1 Graphic Online, 9 Dec 2020 2 The Africa Report, 17 Dec 2020 3 Bloomberg.com, 9 Dec 2020 4 Peace FM, 10 Dec 2020 5 Ghana Web, 11 Dec 2020 6 Citi News Room, 12 Dec. 2020 CONFIDENTIAL 1 Court. The Supreme Court says it will take 42 days to adjudicate any election petition, should Mahama challenge the polls.7 The integrity of the election process has also been damaged by a series of electoral commission backtracks. A day after declaring the results, the EC said it had made a mistake in the figures it put out. Its correction of the percentages given to Akufo-Addo and Mahama caused further doubt and suspicion on the part of the opposition NDC.8 The EC has changed the presidential vote tallies about six times so far, and is yet to make a decisive statement on the election results. Favoured investment destination in 2021? Economists are divided in opinion on how the current uncertain political environment will impact economic activity and local and foreign investment in the country. As an investment destination, Ghana has had comparative advantage over its regional neighbours in regard to political stability, rule of law and the strength of its financial system; however, the country risks losing this advantage due to the contested election. University of Ghana’s institute of statistics, social and economic research director Peter Quartey said he does not expect any post-election dispute at the court to disrupt the economy, given the Supreme Court’s assurance of addressing the matter within two months.9 However, University of Cape Coast business school dean John Gatsi believes investors may be discouraged by gridlock in parliament over the next few years. Additionally, a majority win in parliament for the NPP – which is still possible – will further discourage investors, given the NPP’s chequered history in power under Mahama, who has faced multiple corruption allegations.10 Shortly after the EC announced the disputed election results, government statistician Samuel Kobina Annim on 16 December said gross domestic product (GDP) had contracted 1.1% in the three months through to September, following a contraction of 3.2% in the previous three months, effectively meaning the country is in recession. This will compound investors’ worries about Ghana as an investment destination in 2021. The recession breaks a 37-year-long growth cycle, as the last recession was recorded in 1983 – a year characterised mainly by political instability, famine and other economic unrest. The third quarter’s contraction is attributed largely to the pandemic’s effect on the hospitality sector as the hotel and restaurants industry saw a contraction of 62.1%. It was followed by the mining and quarrying sector, which saw a contraction of 16.9%. However, despite the record-breaking recession, finance minister Ken Ofori-Attah’s Q1 2021 budget forecasts the economy will grow at 1.9% at end of year, against an International Monetary Fund forecast of 0.9%. This is largely on account of government’s 100 billion Ghanaian cedi (GHS) ($17 billion) Ghana Covid-19 Alleviation and Revitalisation Enterprises Support (Ghana CARES) programme and a healthier global economy. Largely peaceful elections The election was largely peaceful but marred by patches of violence during counting and collation of results. Police recorded 61 election-related incidents of violence across the country, six of which involved gunshots and resulted in five deaths.11 This was a relatively peaceful election compared to some of its regional neighbours, especially Guinea and Côte d’Ivoire, but a regular achievement for Ghana. EC chairperson Jean Adukwei Mensa praised election workers for operating the polls smoothly and openly, despite the logistical issues caused by the coronavirus pandemic.12 The opposition NDC has 7 MyJoyOnline, 24 Nov 2020 8 Pulse, 10 Dec 2020 9 B&FT Online, 15 Dec 2020 10 GhanaWeb, 4 Dec 2020 11 Pulse, 9 Dec 2020 12 Ghana Web, 10 Dec 2020 CONFIDENTIAL 2 long accused Mensa of being too close to the ruling party. However, independent observers have also congratulated Ghana for conducting largely peaceful polls, in line with its reputation as one of West Africa’s most stable democracies. The European Union’s Election Observation Mission Ghana 2020 said: “The 2020 elections were organised in an efficient and transparent manner, and voters participated freely. The elections were competitive, and contestants could campaign without hindrance.”13 That said, the EU also noted the opposition’s concerns, particularly regarding the neutrality of the EC: “A few isolated violent incidents occurred, and numerous stakeholders expressed deep apprehensions about the possible use of vigilante groups by political parties. Unregulated political finance, misuse of state resources and numerous instances of vote-buying resulted in an unlevel playing field…state media favoured the ruling party and its presidential candidate who received extensive coverage at government inaugurations. The main opposition party frequently expressed a lack of confidence in the Electoral Commission, accusing it of partisanship and criticising the timing of the new voter registration exercise, so close to elections and during a pandemic.”14 Ghana’s independent and nonpartisan Coalition of Domestic Election Observers stated that 12,000 observers were present for polling day. Over 60,000 security personnel had been stationed at polling stations to maintain order. 13 Europa.eu, 9 Dec 2020 14 Europa.eu, 9 Dec 2020 CONFIDENTIAL 3 Planner 28 Dec 2020 (Ghana) Second round of voting, if necessary; 1 Jan 2021 (Africa) African Continental Free Trade Area to commence; 20-22 Jan 2021 (Ghana) Bank of Ghana Monetary Policy Committee meets; 25 Jan 2021 (Ghana) Announcement of Bank of Ghana Monetary Policy Committee decision. Chronology 17 Dec 2020 Accra (Ghana) MyJoyOnline. Ghana’s Electoral Commission (EC) announces that main opposition party National Democratic Congress has won the remaining seat to be counted in the nation’s legislative elections, Sene West, matching the ruling party New Patriotic Party’s tally and creating a hung parliament; 16 Dec 2020 Accra (Ghana) MyJoyOnline. Government statistician Samuel Kobina Annim says GDP contracted 1.1% in Q3, following a contraction of 3.2% in Q2, even as government eased restrictions imposed to curb the spread of the coronavirus pandemic; 10 Dec 2020 Accra (Ghana) Reuters. Ghana’s finance ministry says the country plans to raise up to $5 billion in 2021 on international capital markets to support budget expenditures; 9 Dec 2020 Accra (Ghana) Reuters. Incumbent President Nana Akufo-Addo wins presidential elections with 51.59% of the vote, but opposition candidate John Mahama’s party rejects the results, calling the election “flawed” and “discredited”; 8 Dec 2020 Accra (Ghana) MyJoyOnline.
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