Ghana – consolidated update

Dear reader

This week is the final update on Ghana. The focus is on the economic and political trends so if you are mainly interested in the business implications please refer to the earlier Ghana update (2 weeks ago) or contact us on We plan to provide a further update on Ghana in late September once we have a clearer picture on the Eurobonds, the IMF discussions, the NPP party challenges and the implications for growth and business.

Next week we will have a closer look at Uganda.



  1. Continued growth for the short term, but real risk of crisis. Growth will continue based on increased oil production. Increasing risks of rapid slow-down. Jobless growth. Risk of increasing populism (increased interventionism, possibly using faultlines).

  2. Slowly changing “political DNA”. Leading parties and party strategists still playing by the old rules, but the urban middle class is changing (more floating voters)

  3. Inequality is increasing. Perceived and real gaps are becoming more visible gaps.



Status, Aug 2014


To watch

Present situation

  • Social development

  • Growth and macro-economy

  • Governance

  • Global drivers

Second best

Trend: ↘

Growth and stability continues, but crisis approaching. Will be in 3rd (of 4) scenario within 2-3 months.

Macro-economic stability ↘

Economic mgmt 

Corruption ↘

Democracy ↔ Inequality →

  • Increasing interventionism, populism

  • Imminent crisis signs (arrears, both forex and domestic) leading to shortages. Eurobond issue happening at at what rate? IMF deal

  • Key infrastructure (power, harbours)

  • Popular dissatisfaction (strikes)

  • Root causes and needed reforms progress, undermining of key institutions

  • Parliament becoming more independent

  • China slowdown


Ghana is on an increasingly downward trend with real risks of social, fiscal and macro crisis, building up during the next 3-6 months. Some degree of denial at the top still exists. Government disconnect and increasingly hollow rhetoric and partially open political discontent in NDC are some of the signs.

The coming 2-3 months will likely provide much more clarity on the depth of the slowdown as well as government’s willingness and ability to address the problems. The planned eurobonds issue (August) and the IMF mission (September) will be particular event to monitor.

Politically, the leadership is facing serious criticism, both for worsening living conditions, but also for poor communication and not being in control. Government credibility is increasingly a challenge with overly defensive lines on exchange rates, denial of the ongoing diesel crisis and some degree of suspicion on growth and inflation data.

The leadership seems to be aware of some of these issues, but is yet to come up with a clear, credible plan to drive even relatively simple (and potentially popular) messages and reforms such as addressing ghost workers or key corruption cases. There are indications of multiple power centres in NDC as well as regular media reporting on tensions within Flagstaff (presidency) and cabinet. No signs of Mahama not winning the NDC nomination, but NDC leaders will know that he may not easily win in 2016 – that’s unless the opposition NPP implodes.

Eurobonds: Government reportedly plans to issue eurobonds during August. With Zambia paying more than 8% for their latest bonds, Ghana would likely have to pay more given a deeper crisis and poorer ratings, although investors will be aware that oil production will likely double to 200.000 barrels during 2016 and thus close the current account deficit.

Scenario status:

We operate 4 core scenarios. Overall, there are most features from the 2nd best scenario with a few features from the top scenario (continued natural resource finds, G7 growth) and an increasing number from the 3rd scenario (leadership, institutional level/reform, fiscal space and China slowdown). We are also closely following key political events – notably party conventions in late 2014, budget and revenue data, gold, cocoa, oil and gas production, fiscal crisis signs and implications.

The indicators:

  • The World Bank CPIA, indicator of public sector quality: Overall a stable picture, marginal decline or possibly just becoming more realistic. Same for TI on corruption.

  • Mo Ibrahim indicators (rule of law, human development, business opportunities and human rights) are stable at a relatively high African level between 2006 – 2013, although with a small, but consistent decrease in economic opportunity from 2008.

  • PEFA, budgets, revenue figues, interest/exchange rate spreads

  • Cost of doing business index, fragile states index.

  • Indicative, qualitative indicators: real interest rate (bureaux), strikes, Parliament “noise”, social media activity, handling of corruption cases, blantancy of key politicians.


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