GHANA

A legal dispute over the 2020 presidential and parliamentary elections may only be resolved in early 2021. In the meantime, political uncertainty and policy-making delays will pose temporary contract risks. Ghana is banking on an economic recovery in 2021 as indicated by slowing inflation and a strengthened financial sector. The main risk to a recovery remains the country’s growing debt burden, including legacy power sector borrowing and planned issuance of more international bonds next year, while government revenues remain constrained, thus posing serious risk to debt sustainability. Ghana will struggle to service its debt, even if the economy makes a sustained recovery from 2021. The interest payments/revenues ratio is close to 40 percent before considering principal repayments. Beyond the debt crisis, the government will face renewed pressure from several domestic issues, such as renewed separatist activity in eastern Ghana’s Volta region in 2020 and ongoing corruption scandals.

• President Nana Akufo-Addo, in his first term, delivered some key promises such as abolishing fees for senior high school education. Yet, he failed to deliver on other 2016 campaign such as his pledge to put a hospital and a factory in every one of Ghana’s 216 districts. In his second term, his government will again struggle to deliver key promises as economic growth slows and revenues sink. has presided over an economic recovery since coming to power in 2016. His government is also facing graft allegations resembling those that took down the previous NDC administration. The NPP government is facing mounting allegations of misprizing of contracts, cronyism, and fraud, in an apparent continuation of the previous NDC government’s practices.
• Political violence is unlikely to result in large-scale unrest to the extent of threatening stability. The fierce rivalry between the country’s two main political parties makes violent protests almost inevitable, especially in case of disputed elections, like those of 2020. Politically motivated unrest is likely over corruption allegations and poor socio-economic situations. Hotspots for protests and riots include over-crowded areas of Accra, such as Fadama, Nima, Maamobi, Ayawaso, the Agbogbloshie market and the violence-prone ‘Sodom & Gomorrah’ area close to the central business district. While the threat of terrorism in Ghana remains low-to-moderate at this time, there are some factors which indicate that an attack in Ghana cannot be ruled out entirely.
• The IMF predicts Ghana’s economy will grow at lowest rate in 2020 in 30 years, while public debt has pushed past 70 percent of GDP. Oil price volatility in the first eight months of 2020 resulted in a USD 1.9 billion drop in oil export revenues from the Jubilee, Sankofa, and TEN fields, while the development of the Pecan oil project remains stalled. However, there is a growing anticipation of a recovery in 2021, which the IMF forecasts at four percent and is mostly driven by post-lockdown accelerated quarterly growth and renewed business optimism. These optimistic projections need to take into account the gaping fiscal deficit. Other key concerns persist over power sector debts and costly take-or-pay contracts.