By Samuel LARTEY (Prof)
Elections in Ghana have long served as a benchmark for democratic maturity in Africa. The 2024 general elections marked another pivotal moment in Ghana’s political journey, with John Dramani Mahama of the National Democratic Congress (NDC) receiving a congratulatory call from Dr. Mahamudu Bawumia of the New Patriotic Party (NPP), following provisional results that signaled Mahama’s victory.
This gesture of goodwill not only highlights Ghana’s democratic resilience but also has profound implications for the economy, investments, and business landscape, both locally and internationally.
Economic implications of peaceful elections
A smooth electoral process is a bedrock for economic stability. Ghana, recognized as one of West Africa’s most stable democracies, continues to attract investors and businesses seeking to expand into Africa. The peaceful transition of power assures investors that their ventures in Ghana are protected from the economic shocks often associated with political instability.
In 2020, Ghana’s economy grew by 0.4% amidst a global pandemic, demonstrating resilience. However, political stability remains a crucial factor for sustained growth. According to the World Bank, countries that experience electoral violence or disputed outcomes tend to face economic contractions of up to 2.5% annually due to capital flight and reduced investor confidence.
For Ghana, peaceful elections bolster its image as a reliable investment destination, enhancing its ability to attract Foreign Direct Investment (FDI). The Ghana Investment Promotion Centre (GIPC) reported FDI inflows of $2.65 billion in 2021, with stability being a key driver. A similar or better performance is anticipated in the post-2024 elections, given the reaffirmed commitment to democracy.
Impact on businesses and investments
- Investor confidence
The call from Dr. Bawumia to Mr. Mahama reinforces Ghana’s reputation for political maturity. Such gestures foster confidence among foreign and local investors, ensuring continued investments in key sectors such as agriculture, manufacturing, and technology. For instance, international firms like Gold Fields and AngloGold Ashanti often cite Ghana’s stability as a reason for maintaining operations in the country.
- Financial market stability
Ghana’s financial markets often react positively to peaceful elections. In 2016, after a similar smooth transition, the Ghana Stock Exchange’s Composite Index rose by 7.9% in the subsequent months. A stable political environment ensures minimal disruptions to trading, exchange rates, and banking operations, which are crucial for economic growth.
- Business continuity
For businesses, elections can be disruptive. However, peaceful processes allow uninterrupted operations, fostering growth. In 2024, companies like MTN Ghana and Unilever are poised to capitalise on post-election stability to expand their market reach.
Relevance to Ghana’s economy and beyond
- Tourism and hospitality
The peaceful elections also bolster Ghana’s appeal as a destination for international tourism and business conferences. The sector, which contributed $3.7 billion to GDP in 2019, is expected to rebound strongly post-election, attracting events such as the World Tourism Forum or African Investment Conferences.
- Trade and regional integration
As a key player in the African Continental Free Trade Area (AfCFTA), headquartered in Accra, Ghana’s political stability enhances its position as a trade hub. Peaceful elections ensure uninterrupted progress on trade negotiations and implementation, positioning Ghana as a gateway for Africa’s $3.4 trillion market.
- Global perception and aid
Countries with stable democracies are more likely to secure international aid and partnerships. In 2021, Ghana received $1.5 billion from development partners, much of which was directed towards infrastructure and social projects. A stable political climate post-2024 elections ensure continued access to such funds.
Call to action for businesses and investors
The 2024 elections underline the importance of democracy in fostering economic growth. Businesses should take advantage of the stability to scale operations, explore partnerships, and invest in emerging sectors like renewable energy and agritech. Investors, both local and foreign, can expect favorable conditions, as Ghana’s stability supports policy consistency and long-term economic planning.
Conclusion
Dr. Bawumia’s congratulatory call to Mr. Mahama is more than a political gesture; it is a signal to the world that Ghana remains a beacon of peace and democracy in Africa. This moment has significant economic and business implications, reinforcing investor confidence, ensuring market stability, and positioning Ghana for sustained growth. As the Electoral Commission concludes its official processes, the world watches a country that has mastered the business of peace, showing that democracy is not just a political ideal but an economic asset.
