By Kumi Owusu-Ansah
No two ways about it, this has not been an easy time to lead a government. Right-wing challengers have taken power in Italy and Sweden. Rishi Sunak, the (now-former) British Prime Minister, was hurled out of office on July 4th after his Conservatives were handed their ticket to oblivion in an electoral Armageddon, after 14 years in power. Germany’s ruling coalition is at a breaking point, all three of its parties beaten at the Euro-elections by the far-right Alternative for Germany.
Olaf Scholz, the chancellor, has proved incapable of exercising leadership in Europe even on a good day. In a month, Paris will welcome the world to the 33rd Olympiad, but Emmanuel Macron’s Ensemble alliance received a humiliation on June 30th in French parliamentary elections. Brazil’s Jair Bolsonaro was defeated by a leftist formal President. Joe Biden’s administration faces similar fate in the looming US elections. All over the world, democracies face anti-incumbent anger.
In Ghana, meanwhile, Nana Addo Dankwa Akuffo-Addo and his NPP government hope to buck this trend. The last eight years have been a white-knuckle ride for Ghana’s economy with a record number of people inactive through long-term unemployment. A deft opponent while in opposition, he played his predecessor, John Dramani Mahama, like a fish on the hook. After eight years of economic underperformance, his actions have come back to haunt him.
It should be little surprise that the Ghanaian electorate is unhappy with Nana Akuffo-Addo; Mr Mahama also arrived at such a pass while in office. Most of his government’s programmes hadn’t yielded the fruitful outcome he’d hoped. Slow growth meant deficit targets were missed and the public finances suffered from a chronic malaise. Productivity growth in the last eight years has been the weakest since record began. Different levels of stop, with crisis after crisis meant Ghana is a low-growth, low-productivity, low-investment, low-wage economy. And that means higher levels of poverty, destitution and inequality. The last eight years has seen Ghana’s economy enter into a doom loop, leaving the country at the mercy of the IMF.
The supply side of the economy has been very badly managed and has suffered because of how the cedi had performed and ate into our finances. That meant we were unable to cope with major adverse events and the damage high inflation has done to household finances. The economy was made riskier just as the global economy became riskier.
In the last five years, the Akuffo-Addo administration has been buffeted by major external shocks such as covid-19 and the war in Ukraine. It might seem like a clear example of a government failing to see the wood for the trees, but the President was making choices forced upon the leader of a country with an economy mired in stagnation and a fraying public realm.
From 2017-20 there was a purpose to Nana Akuffo-Addo’s government and it was well controlled. Then it all fell apart. The pandemic was the trigger and inflationary shocks caused by Russia’s invasion of Ukraine were the principal causes. After 2020 all the stable elements of his administration fell apart. True, Nana Addo’s government had “the men” but these events stymied what he could do with those men. A lot has changed – the pandemic has created a new economic order, war in Ukraine has changed the fiscal outlook of most governments.
On 30th October 2022, the President made a live broadcast to tell the Ghanaian public what they already knew – the grim reality of the current global economic climate. But his speech did not give any hope of a way out of the country’s present predicament either. Nevertheless, the constant flux made it harder to build a defence of the NPP’s record in office. There’s been a real difficulty with consistent narrative and the story they’re trying to tell.
Yet, once again, the President and his NPP government find themselves bogged down with domestic political resentments. The main opposition party, the NDC along with politicos and activists, still point an accusatory finger – the same the NPP did while in opposition – at the president. For sometime now, the most confrontations have come from the so-called Freedom Fighters and the #FixTheCountry movements.
But Ghana’s troubles have only grown since then, with more economic woes to follow in the years ahead, across all sectors without any help to ease the country’s high cost of living crisis. The #FixTheCountry movement had also been furious that the government often used a constitutional maneuver to force striking workers back to their job. The saga surrounding the future of his then finance minister, Ken Ofori-Atta, invited more difficult questions about the President, and added more fuel to the flames in the country.
What is more, in the face of our current economic crisis, the Bank of Ghana, which has been a lame duck for decades – unable to neither tame inflation nor “arrest” the cedi’s depreciation against the dollar – is now declared bankrupt. There’s been no effective action to stop activities in the “black market” that is adding more pain in the fight against the decline of the cedi. The winner in all these has been financial markets which have sent Ghana’s cost of borrowing to a record high, sank the cedi and roiled Eurobonds.
That said, whoever wins this year’s election will have a direct inheritance of what an economist friend of mine calls a “bin fire” of challenges. You can call it déjà vu all over again. The stakes are high. As we watch politicians behave robotically and tetchily, busy selling their offer of prosaic stability with seductive manifestos as the antidote to years of economic hardship to a fatigued voting public, we mustn’t forget the situation that awaits the next government. The tax burden at its highest. The national debt at its highest. A healthcare system in permacrisis. Public facilities in parlous state. Uncompleted government projects. Energy and public services still unravelling. Less effective technology to combat crime. Our small and growing businesses in need of access finance to scale up. Ordinary families still feeling the impact of high prices.
At root, these problems are a product of our growth performance. Many economic think-tanks acknowledge that parts of Ghana’s economic stagnation, not least the pandemic, cannot be placed at the door of the NPP government. But almost all serious economists agree that negative events happened too quickly and Nana Addo’s government was far too focused on “Free SHS.” It proved economically damaging, not to mention socially and politically unsustainable.
What is more, bad decision-making also explains some of these. So does the repellent way our politics has been conducted. In the last four years, the NPP government has been much busy treating politics as a grotesque form of soap opera to manage and develop the economy properly. Poor growth also means that the Akuffo-Addo administration ended up introducing some 21 tempestuous taxes while delivering less in services. That is highly unattractive combination and one of the reasons this current NPP government is so very unpopular. It has not been a forgivable frailty.
The President has also fallen into traps, some of his own making. The legacy of covid-19 and inflation makes it a rotten time to face voters. That the errors of his administration or having Nana Addo in charge during a time of national emergency were NPP-made is ignored.
First, the President should’ve reshuffled and assembled a new cabinet immediately he began his second term in office based on competence, not fealty, while the covid-19 pandemic was still ripping. He should’ve focused, above all, on the overwhelming priority of restoring the NPP’s reputation for fiscal competence. The public finances and the broader economy needed to be put back on an even keel while dealing with high cost of living, and a credible plan to bring down inflation. The President and his new cabinet should’ve jettison the obsessive focus on whether the NPP can win this year’s election, and concentrate on providing an effective government.
Second, the President should’ve reduced the size of his government and cut down unnecessary waste that ate into the government’s annual fiscal budget. Policymakers who attended the annual meetings of the IMF and World Bank made it clear the blend of amusement, anxiety and anger with which the former finance minister, Ken Ofori-Atta, handled the economy. Snookered by his own economic ideology, with a cold, bullying zeal, he abandoned the NPP’s pro-market instincts that shot down inflation and propelled the cedi to level up with the dollar under the Kuffour administration. Rather, he resorted to wading into the mire of culture war and embracing the nastiest of policies – high taxes.
Third, the Bank of Ghana should’ve been made independent from the government once it took office in 2017 (one thing successive governments failed to do) so that the misbehaviour of the government will not force its hand on monetary policy. Until then, Inflation will remain too high. Monetary policy could’ve addressed that. According to the IMF and the World Bank, confidence in the rationality and self-discipline of Ghana’s policymaking has been damaged in the last twenty-five years, just as trust in our country’s willingness to come clean during the recent IMF’s audit of our financial affairs.
Fourth, the NPP government should’ve spent more on capital projects while borrowing was cheap before the pandemic struck. The post-covid world is running on gigabateries in line with the government’s net zero emission programme. More investments is needed in this area to create new jobs. Amongst the Financial Times 2024 list of 125 fastest growing companies on the African continent, only three from Ghana made the cut: Hubtel Ltd, KudiGo Inc. and Zen Petroleum Ltd. That explains some of the consequences of Mr Ofori-Atta’s punitive budgets. With such evidence many also believe that the NPP government shot themselves in the foot, and dragged the rest of the country down with them.
Given the grimness of the inheritance about to land in the lap of the next President, and the time limit it will take to grapple with it, he will need to persuade the public to give him the benefit of the doubt that his plans will reward patience. And if he proclaims that he will prove his worthy of the country’s trust, he had better be believable. Ultimately, the only way out of the bind the country is in: a return to strong and sustained economic growth.
Many members of the NPP acknowledge that political upheaval in recent years had been the most edifying spectacles for the administration. Policy failure after failure has corroded confidence in the capacity of the state to rule wisely and well. Public institutions have repeatedly betrayed the public’s trust, so are some government officials. The Ghanaian electorate appears to agree; they may not have warned to the next ‘Big Man’ but they can see the writing on the wall.
Trust is a precious commodity in politics and now so rare that the election has been devoid of it. Time and again, voters have expressed withering contempt for politicians. Time and again, the politicians have suggested that they do not think voters can be trusted to handle the truth about the challenges facing Ghana by swerving the crunchier choices and grittier trade-offs that will confront the next government.
An axiom of democratic politics is that voters grow tired of incumbents. When they do, they will turn to the alternative. It is customary to sneer at politicians, but being able to persuade voters that painful change is worth it is a misunderstood and hugely underrated virtue. At this point, nothing matters more than solving Ghana’s stagnant productivity. Choosing to reassure voters rather than seek a mandate; or how you govern instead of how you win, is my little advice.
The writer is an investment banker and a contributing columnist to the B&FT
