Oil-price volatility highlights the fragility of a development model based on a single resource. For oil-producing countries the imperative of adopting a more diverse investment strategy can no longer be ignored.
The grace period is over
The case had been brought against the ruling National Democratic Congress (NDC) party and the Electoral Commission by the country’s main opposition party – New Patriotic Party (NPP).
The day of reckoning, August 29, came with an eerie chill, never mind the hot, humid weather. Accra, usually heaving with heavy traffic, was a ghost town.
Like Ghana’s economy, the country was holding its breath. The buoyancy that had come to define the country’s economy in the last decade was slowing down and businesses were showing signs of stress – some were talking of leaving the country.
The long eight month grace period is over. Now, excuses will not be tolerated
This is a far cry from Ghana’s normal poster child image of a thriving economy that continues to thrill investors, especially after oil and gas joined Ghana’s massive gold and cocoa exports.
As investment slowed, official arguments blamed the government’s limbo on the election petition.
Businesses complained about snail-paced administrative decisions and an erratic electricity supply and the government struggled to handle a 2012 runaway budget gap of over 12% of the country’s Gross Domestic Product.
The tripling of the wage bill between 2009 and 2012, explained as being linked to efforts made to bring parity to public sector pay grades, pushed ratings agency Fitch to downgrade the country’s B+ rating to negative in February.
But this hasn’t prevented an unprecedented number of public sector strikes in 2013.
And there are other worrying signs to suggest that President John Mahama might not have a firm hand on the steering wheel. The promise of an enhanced electricity supply, after the breakdown of the unreliable Nigerian West African pipeline, remains just a promise.
Work at the Sinopec-Ghana National Gas project, which is expected to supplement the country’s energy needs, stopped after payment delays and disputes saw workers downing tools in April. Work finally resumed after a $188m China Development Bank loan disbursement: shifting positions and uncoordinated delivery dates have become the hallmark of the government.
Now, a recent report has revealed the loss of some $600m in fictitious contracts at the Ghana Youth Employment and Entrepreneurial Development Agency (GYEEDA), an agency set up during the John Kuffuor administration to cater for youth employment, all eyes are on President John Dramani Mahama for action.
It is thought that some of that money went to pay footsoldiers in the election battle. But instead of the axe falling, and heads rolling, Mahama has simply asked the money be paid back. Sceptics will point to the failure of the government to retrieve a controversial $51m payout to businessman Alfred Wayome, plus the inability to meet a further $600m in debts inherited from the previous administration.
GYEEDA and legal debts are nothing compared with rising public debt coupled with government borrowing at interest rates of up to 27%. The Danquah Institute, a local opposition political think tank, says the rise of public debt stock from $16bn in December 2012 to more than $20bn at the end of August 2013, “is stifling real private sector growth by squeezing out economic actors from the credit market”.
Of course, the country still has great potential. The civilised manner in which it handled the contentious election petition, backed by an independent and free media environment, bears testimony to its democratic strength.
Now the Supreme Court’s endorsement of Mahama’s election win and a magnanimous concession speech by his rival, Nana Akuffo-Addo of the opposition NPP, throws the full spotlight on the NDC.
The political wound on the country’s side has been healed, and the capital’s traffic jams, which cleared for a day, have since returned – as if to usher in a new dispensation. “The long eight month grace period is over. Now, excuses will not be tolerated”, says a Ghanaian editor and staunch Mahama supporter.
This article first appeared in French in the 6-12 October, 2013 (no 2752) edition of our sister magazine, Jeune Afrique.