Election year – Navigating economic challenges and opportunities


Election years, by their very nature, create winners and losers; influencing not only political outcomes but also economic dynamics.

Since 2000, the year that marked the end of Ghana’s ‘political wilderness’ era, economic conditions have mostly succumbed to the intense struggles among political elites vying for power during elections. As the 2024 election heats up, businesses are grappling with concerns about navigating the economic unrest commonly associated with Ghana’s elections. Well, a good starting point is to glean from past experiences.

What has been the economic portrait during previous elections?

In the 2000 election, Ghana’s economic growth was 3.7 percent. It increased to 5.6 percent in 2004 and by 2008 rose to 9.1 percent, driven largely by government spending facilitated by the fiscal space gained from the 2006 debt cancellation that forgave two-thirds of Ghana’s external debts.

Fast-forward to the 2012 election year; despite a high fiscal deficit of 11.5percent of GDP and inflation of 11.2 percent resulting from the government’s pre-election expenditure increase on public sector wages and subsidies, the economy still expanded by 9.3 percent on the back of rebasing the national accounts. It was the domestic banking and energy crisis in 2016 that broke the camel’s back, slowing the economy down by 3.4 percent with an inflation rate of 17.1 percent.

In the 2020 election year, the economy faced its harshest blow, recording a growth rate of 0.5 percent and the highest fiscal deficit in Africa – and experiencing cost-of-living crises. The main culprit, the COVID-19 virus, not only jumped from bats to humans but also leaped onto the economy. Despite government blaming everything on the pandemic, one could argue the electioneering process was also an accomplice. Yet amid the challenges, the country managed to sustain single-digit inflation, declining interest rates and a stabilising currency.

Sources:  Tradingeconomics.com, Bank of Ghana, Bridgewater Analysis

Election years in Ghana, as seen from the graph above, have historically been characterised by large budget deficits – mostly accrued because of the incumbent government’s tendency to overspend to win. Suffice to say that the rewards and spoils of electoral victory are a key inspiration for most political parties’ desire for power.

The 2004 election was an exceptional case, as the budget deficit remained very low and the primary domestic balance even achieved a surplus. This was somehow anticipated, given that IMF and World Bank were wielding canes over us to comply with commitments under the HIPC conditionalities. Plus, the 2004 election outcome was predictable in favour of the incumbent, so there was no need to overspend.

In hindsight, it appears that when Ghana is under a fund programme, there is a temporary improvement for a year or two; after which everything seems to go downhill. Now, with the return of headmaster IMF, the question arises: will we conduct ourselves responsibly during this 2024 general election?

We should expect some level of fiscal discipline

Global Info Analytics (BMI) believe that there will likely be a government change in favour of the NDC in Ghana’s 2024 general election. A change in government might not really have any significant impact on Ghana’s economic dynamics, as there seems to be a striking resemblance in the polities of NDC and NPP. On the macroeconomic side, the economy is forecasted to expand by 3.7 percent in 2024, implying a beef-up in production and consumption.

Inflation is pegged at 15 percent in 2024 due to base effects and a stronger exchange rate, following the restructuring of Ghana’s external debt. As inflation cools down this year, the central bank is likely to adjust interest rates downward – affecting investments. Moreso, given the watchful eyes of the IMF, there is likely to be some level of fiscal discipline in the 2024 election as well as in the post-election year regardless of the election’s outcome.

What opportunities and threats does the forecast present to businesses?

There is likely to be some saving grace for businesses in this 2024 election. For instance, the projected economic improvement hints at business growth and a boost in investor confidence. Also, inflation should be on the radar for owners of physical assets that generate high service demand and producers of commodities with fast-rising prices.

Such companies can quickly adjust to the rhythm anticipated inflationary fluctuation. In fact, the services sector is expected to expand by 1.9 percent in 2024, creating opportunities to attract foreign investments. Plus, the prospect of a stronger exchange rate presents a silver-lining for businesses engaged in global sourcing for inputs to negotiate better terms, especially the industry sector – which is projected to turn around this year with a growth rate of 3.7 percent.

While 2024 promises a favourable economic year and an inspiring business environment, some subsectors are still concerned about their fate – as they should be. The ongoing fiscal consolidation, corrective monetary policies, inflation and interest rates will generally keep private consumption and investment low, likely resulting in a slow non-extractive growth.

Companies operating in competitive markets will find it difficult to pass on any further increased costs to consumers, potentially shrinking their profit margins. Some industries that might struggle with this dilemma include companies within the agriculture value chain, especially consumer staples. The agriculture sector is projected to slow down in 2024, largely on the back of lower growth in the crops, livestock and fishing sub-sectors.


In brief, the economic prospects for the 2024 election year appear poised to favour more wins than setbacks for Ghanaian businesses. But then again, building an economy is not quite as predictable as laying brick walls. Therefore, it is possible there could be some discrepancies between the inspiring projections and actual macroeconomic figures. The onus therefore lies on businesses to stay attuned to the 2024 macroeconomic dynamics and remain flexible, adopting strategic adjustments to capitalise on potential economic improvements.

>>>the writer is a Partner at Bridgewater Advisors (Africa). He is an Investment Banker with over 15 years of practice experience in corporate finance, infrastructure & project finance, financial restructuring, and transaction execution. He can be reached via [email protected] and or +233 (0) 20 421 33 33

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