lack of transparency

Ghana: Labour groups wary of pension fund restructure amid govt mistrust

By Jonas Nyabor

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Posted on August 14, 2023 08:39

 © Ghana’s Finance Minister Ken Ofori-Atta with Stephane Roudet, IMF Mission Chief for Ghana,  in Accra, December 13, 2022. REUTERS/Cooper Inveen
Ghana’s Finance Minister Ken Ofori-Atta with Stephane Roudet, IMF Mission Chief for Ghana, in Accra, December 13, 2022. REUTERS/Cooper Inveen

Labour unions have consented to their pension funds being incorporated into the government’s debt exchange plan. However, their optimism is tempered by doubts.

Ghana’s labour unions have agreed to the inclusion of their pension funds in the government’s domestic debt exchange programme but remain sceptical over whether the government will stick to its end of the deal.

“The terms stated in the alternative offer are better than the initial offer rejected in December 2022,” labour groups said in a joint statement. “In the event that [the] government fails to implement the provisions as stated in the exchange memorandum, organised labour will advise itself.”  

Some ¢30bn ($2.7bn) in pension funds is to be restructured in the latest round of the debt exchange programme in spite of a previous agreement for an exemption.  

The current deal involves coupons of 18.5% on average for two new bonds maturing in 2027 and 2028 with an average interest rate of 8.4%.  

Additional conditions in the agreement include assurances from the government that coupon payments and maturities will be paid on time and there will be no losses in patrimonial value of the bond.


The government of President Nana Akufo-Addo lost a lot of goodwill after announcing in July 2022 the decision to embark on an IMF programme after several months of spiralling inflation, currency depreciation and fuel price increments.  

Since December 2022, when the government began to make overtures for restructuring pension funds, it has faced fierce resistance from organised labour.  

At the core of the previous rejections is the lack of trust for the government, which went back on emphatic declarations of an exemption of pension funds. The government also missed matured coupon payments to pensioner bondholders on two occasions, prompting public protests by the senior citizens.  

“Based on the history we do not trust the government when it comes to these promises. Our pension funds are not something to be toyed with and we wished that it was exempted as earlier promised,” says the head of one labour union while speaking on condition of anonymity.  

The Ghana Medical Association and the Industrial and Commercial Workers Union, who opposed the previous offers, have aligned with organised labour and said they will monitor the government’s actions.  

“Organised labour’s acceptance indicates a willingness to collaborate with the government on addressing the debt burden. They will intensively monitor and ensure that the government upholds its commitments,” says economic analyst Korsi Dzokoto.   

Political cost 

The political cost of the Domestic Debt Exchange Programme (DDEP) is huge. The inclusion of pension funds in the programme means a lot more working-class Ghanaians will take a hit.  

The government has already taken on $1.36bn in cocoa bills and locally issued dollar-denominated bonds expected to be restructured. It is yet to complete negotiations with private creditors and the official creditor committee for debt relief to guarantee short to medium-term fiscal space.   

“It is difficult with the DDEP because the government is working against the tide and it may not augur well for them in the elections,” says Kwame Ansah-Asante, a political scientist at the University of Ghana.

According to Global Info Analytics’ July 2023 polls, President Akufo-Addo’s approval rating has waned.  

In the Ashanti region, where New Patriotic Party (NPP) has its largest support base, 53% of voters disapprove of Akufo-Addo’s performance thanks to the economic woes.  

If issues of corruption, mismanagement and profligacy are tackled within the government, it may help it win back some support for the party, observers say. 

“Should the government neglect to uphold transparency or effectively administer the economy after restructuring the pension funds, it could trigger orchestrated political repercussions by organised labour and that have the potential to harm the government’s reputation and influence its broader political standing, potentially resulting in a loss of public confidence and endorsement [heading into the elections],” says Dzokoto.

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