In 1957, Ghana became the first African nation to gain independence, led by Kwame Nkrumah, a charismatic advocate of Pan-Africanism. Nkrumah aimed to transform Ghana into a self-reliant, industrialised state, but his policies of rapid nationalisation led to economic instability.
Mounting debt and food shortages culminated in his overthrow in 1966, sparking two decades of political unrest and frequent military coups. In 1981, Jerry Rawlings, an Air Force lieutenant, seized power and established the Provisional National Defence Congress (NDC).
He ruled as a military leader until 1992. In that year, Ghana adopted multiparty democracy under a new constitution. Since then, power has transitioned peacefully between Ghana’s two main political parties, the NPP and NDC.
Despite the country achieving democratic stability, Ghana’s Electoral Commission (EC) has faced increased scrutiny in recent months, with the NDC questioning its integrity (Chart 2) based on irregularities found in the September 9 voter exhibition exercise.
According to the EC, the irregularities were minor teething issues which have since been addressed; still, the NDC’s concerns could fuel the party’s narrative of distrust in the electoral process, potentially undermining an NPP victory.
The election outcome is important not just for Ghana but also for West Africa, where democracy is under scrutiny and has deteriorated with the emergence of the junta-led Alliance of Sahel States. Questions about electoral legitimacy in one of the largest remaining champions of democracy in the Economic Community of West African States (Ecowas) would be reason for concern.
Mahamudu Bawumia
Dr Bawumia is widely recognised for his economic expertise. He holds a master’s degree and a PhD in economics and previously fulfilled the role of deputy governor of the Bank of Ghana. Dr Bawumia has been a driving force behind the current administration’s digital transformation, championing initiatives such as the digital national ID system, mobile money interoperability, and the contentious e-levy on electronic transactions. He is also credited with modernising Ghana’s financial systems, improving government efficiency, and enhancing transparency in revenue collection.
However, his governance credentials have faced criticism. The NDC has questioned the effectiveness of its digital initiatives, arguing some systemic economic issues persist. Allegations of overpricing in government projects, particularly relating to the unpopular e-levy, have also stirred public dissatisfaction, casting a shadow over his otherwise innovative leadership.
Overall, our assessment of Dr Bawumia is that he is a strong candidate with a robust professional background, embodying the archetype of a technocrat who applies technical expertise to governance. Achievements such as the digitisation of Ghana’s economy can be attributed to his focus on evidence-based policymaking and economics.
However, this technocratic approach can be a double-edged sword, as it prioritises logic over political acumen, potentially making Dr Bawumia appear detached to voters. His senior position in the current Nana Akufo-Addo administration, which is plagued by economic challenges, further hurt his reputation. Additionally, his reserved, methodical demeanour lacks the charisma and emotional appeal needed to rival Mr Mahama.
While Dr Bawumia’s track record and modernising vision will resonate with many, we think his lack of dynamism and association with the current administration will hinder his ability to secure broad electoral support.
NPP key promises and implications
▪ Economic policy and fiscal stability. The NPP is a centre-right political party that advocates for free-market policies, privatisation, and economic liberalisation. The NPP promises fiscal consolidation to stabilise Ghana’s economy.
Specific aims include controlling inflation and strengthening the cedi by managing Ghana’s public debt, which peaked at 83.7% of GDP in 2022.
Revenue generation through digital taxes, such as e-levy, is central to these efforts, alongside incentives to attract FDI. Stabilising Ghana’s finances and improving its credit profile would contribute to lower borrowing costs.
The party’s policies often emphasise limiting government intervention and fostering private sector growth via measures that will lower business costs, such as tax amnesties and VAT consolidation.
Reduced social spending, however, could strain disposable income and living standards. While a successful NPP term could build a resilient, investor-friendly economy, balancing austerity and the risk of social unrest will be crucial.
▪ Industrialisation and employment. The NPP aims to expand the One District, One Factory (1D1F) initiative to create manufacturing jobs and reduce youth unemployment. Currently, 168 factories operate under the scheme, supporting jobs in the agro-processing, textiles, and construction sectors.
Industrialisation could reduce import dependence, improve trade balances in the long term, and boost rural employment, as seen in the Ashanti and northern regions. However, stable energy supply remains crucial, and power outages are costing Ghana 2% of GDP annually, according to the World Bank.
If energy constraints and logistical challenges can be overcome, 1D1F could position Ghana as a West African manufacturing hub. ▪ Grid reliability and energy expansion. The NPP plans to tackle dumsor by investing in renewable energy, expanding gas production, and upgrading grid infrastructure.
The goal is to boost alternative renewable energy sources’ share (especially solar) of national power supply while reducing reliance on hydropower. In 2021, hydro accounted for 34.1% of electricity generation and solar only 0.6%.
Stable power supply would transform businesses and save an estimated $2.4bn annually lost to outages. Egypt, for example, increased power generation by 10% and attracted $8bn in FDI through energy diversification, which means the NPP’s strategy could enhance productivity and investment.
Ghana currently relies on fossil fuels for 65% of its power generation, which complicates a quick transition. Success will require substantial investment and regulatory reforms to attract private sector involvement, as seen in Kenya’s rural electrification projects. While the goal is attainable by 2030, high upfront costs are a significant hurdle.
▪ Education and healthcare reform. The NPP plans to expand the ‘Free Senior High School’ programme, which has benefitted over 1.2 million students. The party also wants to enhance healthcare services by improving rural health facilities and expanding digital health records.
Greater education access could mean a more skilled workforce, boosting Ghana’s labour market and human capital competitiveness. However, the costs are high: free education currently absorbs about of Ghana’s education budget, raising sustainability concerns.
While improved rural healthcare could lower mortality rates, funding is a challenge. Ghana spends about 3.7% of GDP on healthcare, below the 5% recommended by the World Health Organization. Expanding both sectors would improve social indicators but will require innovative financing to ensure long-term feasibility.
John Dramani Mahama
Mr Mahama’s election campaign positions him as a reformist dedicated to restoring integrity to Ghana’s governance. With nearly years of political experience, Mr Mahama first served as an MP in 1996, was vice president from 2009-2012, and led the country as president from 2012 to 2016. During his tenure as president, he focused on infrastructure development, social policies, and regional equity.
He oversaw projects such as the expansion of the road network and the construction of new schools and hospitals, as well as the creation of the National Health Insurance Scheme. Mr Mahama’s presidency faced significant challenges.
Economic difficulties, including a rising budget deficit, high inflation, and increasing debt, attracted widespread criticism. His administration was also plagued by dumsor, and the NDC is often blamed for these power cuts.
In addition, Mr Mahama’s government was mired by corruption allegations (Chart 3). A prime example is the ”SADA scandal” in 2014, where $25m allocated to planting trees to combat desertification was misappropriated.
Another high-profile scandal in 2015 involved the exposure of over 180 judicial officers, including several high court judges, who accepted bribes to influence cases. Our assessment of Mr Mahama is that he is a strong candidate, representing the traditional political archetype.
His decades of experience and dynamic personality make him a relatable figure. However, like Dr Bawumia, Mr Mahama’s positives must be weighed against the shortcomings of his previous tenure. Ghana’s history of alternating power is in favour of Mr Mahama, and his strong polling numbers (Chart 1) indicate he is the favourite in a tight election.
Chart 3: Corruption intensified under the NDC’s previous term, which ended in early 2017 Source: Transparency International
NDC key promises and implications
▪ Economic policy and social spending. The NDC is a centre-left political party that supports social democratic policies with an emphasis on poverty reduction, wealth redistribution, and social welfare programmes.
On fiscal matters, the NDC advocates for more state intervention, proposing progressive taxation. The party has also highlighted VAT reforms to provide relief for households and small businesses, including removing or lowering burdensome taxes such as the e-levy.
Its social welfare policies aim to reduce economic disparities through reforms such as abolishing the betting tax and VAT on domestic electricity. Lower taxes and higher public sector wages could ease financial pressures on lower-income households, boosting consumption.
However, Ghana’s debt burden limits fiscal flexibility, and higher social spending could trigger price pressures. While poverty is likely to reduce in the short term under the NDC, strict fiscal oversight may be required to prevent debt distress. Furthermore, significant revenue generation would be necessary to offset increased expenditure.
If managed effectively, higher spending could uplift vulnerable communities and reduce inequality.
▪ Infrastructure development and energy policy. The NDC promises to address dumsor through renewable energy investments. Successful renewable energy expansion could reduce Ghana’s reliance on imported fuels. Improved energy reliability would also enhance business conditions and productivity. Importantly, a more resilient energy infrastructure network should support broader economic growth.
However, financing remains a challenge: the IMF estimates Ghana needs $15bn to meet its renewable energy goals by 2030. Given the government’s limited fiscal space, private sector involvement, foreign investment, and careful resource management will be crucial. The NDC also promises to upgrade rural infrastructure, focusing on roads, access to clean water, and health facilities. Infrastructure improvements in rural areas could close service gaps and promote regional economic integration.
▪ 24-Hour Economy. Mr Mahama’s 24-hour Economy policy aims to transform Ghana into an export-led economy by boosting productivity through round-the-clock business operations, supported by three eight-hour shifts. This innovative idea could increase production, create jobs, and attract foreign investment, especially in the manufacturing and logistics sectors.
However, there are challenges, including higher operational costs, inadequate energy supply, and limited transportation infrastructure. The policy also raises concerns about workers’ rights, including fair pay and rest periods. Robust labour protection policies and infrastructure upgrades would be essential for success.
▪ Education and employment initiatives. The NDC plans to expand vocational training, offer scholarships for underserved students, and improve rural teacher training to address skills gaps and regional disparities. Enhanced training could reduce youth unemployment, as seen in Morocco, where similar efforts boosted graduate employment by 30% in three years.
However, aligning training with market demand is essential to avoid mismatches. Education-focused policies could contribute to building a skilled workforce for the agricultural, manufacturing, and technology sectors. Furthermore, expanding rural education could reduce disparities and improve social cohesion. That said, without strong job creation strategies and economic diversification, graduates could face limited opportunities, highlighting the need for complementary investments.
Scenarios: Political and economic Baseline: Mahama and NDC win
The trend of no party securing more than two consecutive terms holds as Mr Mahama capitalises on his support base and the perceived inefficiencies of Dr Bawumia and the NPP. This scenario aligns with a broader trend witnessed across the continent in 2024, where the incumbent governments in Botswana, Mauritius, Mozambique, and South Africa faced declining support or loss of power due to governance challenges.
Breaking from Ghana’s traditional to-party dominance, independent candidates Nana Kwame Bediako and Alan Kyerematen take votes from the two more established candidates, although we do not think they will force a run-off between Mr Mahama and Dr Bawumia.
In this scenario, Mr Mahama wins in the first round. Mr Bediako, a businessman and social media influencer known as “Cheddar,” appeals to younger voters who are disenchanted with existing options. Mr Kyerematen, founder of the Alliance for Revolutionary Change and former NPP trade minister, takes votes off the NPP, particularly in its Ashanti Region stronghold.
The transition of power is again peaceful, safeguarding Ghana’s democratic stability. While the NDC adjusts policies and taxation, significant changes are constrained by the ongoing IMF programme, which guides decisions through 2026.
Less likely: Bawumia and NPP win Dr Bawumia leverages his achievements as vice president and Mr Mahama’s poor track record to secure the presidency, making the NPP the first party to win three consecutive terms.
The NDC concedes but raises concerns about the EC’s management of the election. The IMF-driven austerity approach continues, restraining purchasing power but curbing inflation and providing greater clarity on government finances.
NPP vs NDC: Economic implications
We used our model software to project the key economic outcomes under the two main candidates. We calibrated various shocks based on the main policy differences between the two parties to determine the implications of a deviation from our baseline (a victorious NDC). Since 2001, economic growth has generally been higher during the NDC rule.
Still, the NPP’s two terms in office coincided with several global economic challenges, including the global financial crisis, the COVID-19 pandemic, and the Russo-Ukrainian war. These external shocks hindered growth through increased costs, supply chain disruptions, and elevated inflation.
In contrast, the NDC has governed during more stable periods, allowing for growth-focused policies without the same external constraints. However, policy differences also played a role in the contrasting economic track records.
The ND’s approach involves higher public spending and greater government intervention, particularly in infrastructure, healthcare, and education. Such direct investment can quickly boost economic activity by creating jobs and increasing demand.
The NPP, on the other hand, emphasises creating a conducive environment for private investments, which, while beneficial in the long term, does not generate growth as quickly as public sector initiatives.
Furthermore, NPP policymaking requires greater private sector involvement, which can be delayed by financing, infrastructure, and regulatory challenges. Moreover, the NPP has focused on economic stabilisation, particularly in response to external factors, including managing inflation, public debt, and exchange rate stability.
These efforts can divert resources from direct growth initiatives, leading to lower short-term growth rates compared with the NDC. These differences led to the following calibrations under the ‘NPP win’ scenario: (i) lower real government consumption but greater real government investment, (ii) higher inflation expectations, and (iii) lower real private business investment. The differences between the resulting forecasts are small. Although real GDP is forecast to be somewhat higher under the NDC than the NPP, economic growth is projected to average 4.6% p.a. under the NDC, as opposed to 4.5% p.a. under the NPP (Chart 4).
On a cumulative basis, the real economy will be 0.5% smaller under the NPP than under the NDC by end-2028. The minor variation between the macroeconomic outcomes is a reflection of how IMF conditions limit the wiggle room either party will have.
Inflation has historically been higher under the NPP than under the NDC. However, our modelled scenario shows a difference of only an additional 0.2 ppt per year on average between 2025 and 2028 (Chart 5).
This again highlights the impact of exogenous factors on Ghana’s price environment, as projected inflation under the two parties is very similar in the absence of external shocks. Chart 5: Barring exogenous shocks, inflation dynamics are very similar under the two parties.
We forecast Ghana’s fiscal deficit to widen once more in the medium term on the back of the resumption of external debt servicing following the recent completion of the Eurobond debt restructuring.
That said, we predict that – under the NDC – this widening will be slightly less severe than what it would be if the NPP retains power. Our baseline projection entails a budget deficit of 5.1% of GDP by the end of the next presidential cycle (Chart 6). If the NPP wins, however, this deficit could widen to 5.3% of GDP by 2028. Chart 6: Fiscal slippage is marginally less notable under the NDC.
Political and economic expectations under the expected new rule
If Mr Mahama is elected president, he will first attempt to stabilise the economy. His current political rhetoric of improving living conditions will be tested, as he would need to balance the IMF’s demands of increased fiscal responsibility against his electoral pledges.
Ghanaians have shown resilience in the face of adversity, but prolonged hardships could heighten the risk of protests. However, with his electoral promises to strengthen the social safety net, we believe he may be granted more time to deliver results.
The deteriorating security climate in the Sahel is concerning; still, Ghana’s strong partnerships with the US and the EU, along with effective security measures, should keep the risk of terrorism spilling over from Burkina Faso low.
Mr Mahama will maintain Ghana’s current diplomatic relations and reaffirm its middle power status. On the economic front, we expect broad-based improvements in Ghana’s economy over the medium term, with real GDP growth forecast at 4.6% annually from 2025-2028, up from 4.2% p.a. during 2021-2024.
Inflation is projected to ease to about 9.0% by 2028. While the fiscal deficit will widen regardless of the election outcome, Ghana’s external position should remain sustainable due to strong export growth, supported by rising gold, oil, and cocoa output.
Overall, economic conditions are expected to improve following the severe exogenous shocks of 2020-2022. Although macroeconomic trends largely remain unaffected by the election result, the outlook is marginally better under the NDC than the NPP.
Here is the link to the full report file:///Users/masahudu/Downloads/20241125%20RB%20Ghana.pdf
