Ghana’s 2024 election from a public policy perspective

By Courage Komla Asase

As it heads to the December 7 polls, Ghana, West Africa’s democracy touchstone, faces arguably its toughest electoral test yet. A junk economy, a polarized nation, low trust in state institutions, a financial sector crisis and a sharp divide between the two contending political parties – fuelling fears of disorderly elections and its attendant aftermath troubles.

In this op-ed, I examine the upcoming elections from a public policy perspective to unpack the issues and zoom in on the most important concerns that must be paramount to the two contending candidates and their incoming cabinet.

The Issues

At the heart of this year’s election campaign is the economy. The country is arguably facing its worst economic crisis since the return to democratic rule. For the first time in its history, Ghana defaulted on its $30 billion sovereign debt in 2022.

While this may not be the first debt management program, it was undoubtedly the most severe, with local bondholders and other forms of investment severely affected. Stéphane Roudet, the IMF Mission Chief for Ghana, acknowledged that although the program is challenging, it is necessary to address the country’s debt crisis. The impact of this crisis was so profound, that pensioners and other elderly citizens had to picket at the Ministry of Finance to demand their full investments.

The debt exchange program had a significant effect on the economy,together with the ailing economy, inflation surged past 50%, the highest rate recorded in the country’s history. By January 2023, inflation had reached 53.6% year-on-year, marking a significant peak due to sharp increases in the costs of food and non-food items. Food inflation alone surged to 61.0%during this period, while non-food inflation stood at 47.9%. Key contributors to this situation included a weak cedi, supply chain disruptions, and external economic pressures.

By July 2024, the inflation rate exceeded the monetary policy rate, and the cedi depreciated dramatically against the dollar—horribly compared to other African peer countries. July 2023, the cedi was on track to become one of the worst-performing currencies in Africa.

Year to year depreciation of the cedi against the dollar 2021 – 2024

The government, which had previously promised not to return to the IMF, made a U-turn and sought assistance for a record 17th fiscal program. In 2023, against the wishes of many, the government announced a debt exchange program after much public assurance from the president and the finance minister. This program was part of the stringent IMF conditionalities and involved a restructuring that imposed an unprecedented “haircut” on local bondholders, triggering protests from pensioners.

Ironically, while the IMF conditionalities called for extensive austerity measures to be imposed on the populace, the government managed to sign unconscionable contracts worth millions of dollars, disregarding sound public judgment and reason.

Amidst these struggles and challenges, there were glaring scandals involving millions of dollars. One notable example was the $100 million deal between the Ghana Revenue Authority and SML Company, which was investigated as a collusion involving a fraudulent company, the Minister of Finance, and actors from the Ghana Revenue Service. These developments raised serious questions among citizens regarding the government’s commitment to addressing self-imposed challenges.

After facing significant difficulties in mobilizing resources and financing budgets, the government introduced new taxes, with the unpopular being the electronic transactions levy (commonly known as the E-levy) and a 10% tax on betting.

Curb on Public borrowing

As of July 2024, Ghana’s debt-to-GDP ratio stood at approximately 75.7%, according to the Bank of Ghana.

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The International Monetary Fund (IMF) projects this ratio to rise to 90.5% by the end of 2024. These figures indicate a significant debt burden, which poses challenges to economic stability and growth. Efforts to manage and reduce this ratio are crucial for Ghana’s fiscal health and sustainable development.

The debt-to-GDP ratio is a key economic indicator that compares a country’s public debt to its gross domestic product (GDP). This ratio is expressed as a percentage and serves as a measure of a nation’s ability to repay its debts. It has become a very topical conversation in Ghana, as it is commonplace information on how unsustainable Ghana’s debt ratio to its GDP has become. With a very whet appetite for the Eurobond market, the current government since it took over power in 2017 – 2023 has raised over 13 billion dollars from the Eurobond market, which significantly increased the country’s debt portfolio. More importantly, the country’s unsustainable debt consumes a chunk of the country’s insufficient revenue through the servicing of this debt.

The statistics show that

Since 2017, Ghana has borrowed funds from the bond market multiple times, specifically through the issuance of Eurobonds. Here is a summary of the borrowing activity:

Number of Times Ghana Borrowed from the Bond Market

1. 2017: Ghana issued bonds totaling $3 billion.
2. 2018: The country raised $2 billion.
3. 2019: Ghana borrowed $3 billion.
4. 2020: The government issued bonds worth $3 billion again.
5. 2021: Ghana borrowed an additional $2 billion.
   In total, Ghana has borrowed funds from the bond market five times from 2017 to 2021.

Total Amount Borrowed

The total amount borrowed by Ghana from the bond market during this period amounts to approximately:

● 2017: $3 billion
● 2018: $2 billion
● 2019: $3 billion
● 2020: $3 billion
● 2021: $2 billion
This results in a cumulative total of approximately $13 billion borrowed from the Eurobond market from 2017 to 2021

What is the remedy – there must be legislation where Ghana’s debt must not exceed a particular percentage of its GDP. The fiscal council must be effective whilst ensuring that there is adherence to section 2 of the Fiscal Responsibility Act and the medium term debt strategy. Last week, there was declaration by the former finance Minister under the erstwhile NDC government that their government will not borrow more than 65% of GDP, whilst this is laudable, the greater concern is to legitimize such promises in becoming part of the financial governance regulations the country, either to be supervised by BoG, or the finance ministry.

STRICT conformity to the Bank of Ghana Finance Act and rules

The Bank of Ghana plays a vital role in regulating currency flow, financial policy, and monetary policies, as well as overseeing the operations of commercial banks and financial institutions across the country. Additionally, it is responsible for ensuring that government actions align with sound fiscal regulations grounded in legislation and law.

However, it was announced in 2023 that the Bank of Ghana provided a funding package of GH₵22 billion to the government without parliamentary approval. This decision, I believe, has contributed to the rising inflation in Ghana.

The regulation that bars the Bank of Ghana (BoG) from financing the government budget without parliamentary approval is outlined in Section 30(1) of the Bank of Ghana Act, 2002 (Act 612), as amended.

Key Provisions:

1. Prohibition of Direct Financing:
   ○ The Act limits the Bank of Ghana’s ability to provide direct financing to the government.
   ○ Specifically, it allows BoG to advance temporary loans to the government, but only up to 5% of the previous fiscal year’s total revenue.
2. Parliamentary Oversight:
   ○ Any financing beyond this limit requires explicit approval from Parliament.
   ○ This ensures transparency and accountability in government borrowing and prevents excessive reliance on central bank financing, which can lead to inflation and fiscal instability.
3. Penalties for Non-Compliance:
   ○ Breaching this regulation is considered a violation of fiscal governance principles and may attract scrutiny from stakeholders, including international financial institutions like the IMF.
   Governance

Winning elections and effectively governing a country are mutually exclusive activities. At the heart of leading a nation toward prosperity lies the necessity for selflessness, expertise, a deep understanding of pressing issues, and the ability to rise above inherent partisan interests—especially in the context of Ghana.

Having studied Ghanaian governance over the years, it is evident that a significant obstacle to development and equitable resource distribution is the ingrained greed and desire among the political class to prioritize the interests of a few over the needs of the masses. This tendency has been exemplified in the governance practices of successive administrations.

Proposed Remedies

To address some of these challenges, I propose several measures:

1. State Enterprise Organizations (SEO): State agencies are integral to Ghana’s governance structure, playing critical roles in delivering government services. For improved governance outcomes, it is imperative that heads of state agencies are recruited based on verifiable track records, with clear job descriptions and performance targets. The authority to appoint or dismiss these leaders should be removed from the president. Currently, it is common for presidents to use state institutions—such as VRA, TOR, GNPC, and Ghana Gas—as platforms to reward political campaign financiers, allowing them to recoup their investments in election campaigns.
   By implementing these changes, we can foster a more accountable and effective governance structure that prioritizes the welfare of all Ghanaians. This revision aims to enhance clarity while preserving your original thoughts and arguments.

This approach clashes with the goals of public policy and reduces some institutions to mere extensions of political influence and patronagest be protected.

How do we save constitutionally mandated bodies to operate to the letter and spirit of the Constitution?

The Ghana Police Service is headed by its Inspector General, the Economic and Organized Crime Office (EOCO) is led by its Director-General, and the Electoral Commission is chaired by its Chairperson. These state institutions are just a few examples of those mentioned in this context. Why are they significant? Their existence and mandate have a direct impact on the country’s democracy and governance flow..

Over the past years, we have witnessed a troubling trend of wholesome politicization of these constitutional bodies and the erosion of integrity within some of these institutions, accompanied by a flagrant disregard for the Constitution. For instance, the Electoral Commission, the judiciary, and the Ghana Police Service have been identified by an opinion survey organised by the Afrobarometer as some of the least trusted organizations. Seventy percent of Ghanaians who participated in the survey had low trust for these state institutions.. This means that seven out of ten Ghanaians believe these institutions lack the credibility and independence necessary to fulfill their mandates. Such perceptions undermine our efforts to build a robust democracy supported by strong and effective state and constitutional bodies.

To remedy this situation, it is essential that the Ghana Police Service establishes an independent process for appointing its Inspector General; this power should not rest with the president. Additionally, the Vice President should not serve as the de facto head of the Police Council. The Electoral Commissioner must also be an independent figure, recruited through a process that is separate from the Jubilee House.

I believe these measures will significantly reduce political influence and bias within these institutions.

Policy interventions and intended outcomes – How do we measure ?

Furthermore, political campaign promises must be accompanied by concrete policy documents and clear financing sources. The ruling New Patriotic Party (NPP), during its election campaign, made several promises outlined in their 2016 manifesto that brought them to power. Among these were:

● Free Senior High School education
● One District, One Factory initiative
● One Constituency, One Million Dollars financing
● One Village, One Dam program
These four initiatives are among the most popular. However, a critical missing piece in this spectacle of promises is the absence of accompanying policy documents and financing sources. To date, we have been unable to track these policies alongside their respective policy documents or extract meaningful outcomes, theories of change, and budget financing.

A policy can be evaluated as either sound or defective based on various criteria: effectiveness, equity, sustainability, efficiency, relevance, public interest, or coherence.

A notable observation is the deliberate posture of the state to present procurement-related expenditures as policy achievements. For example, I discovered that an average of GH₵670,000 of Ghana’s oil revenue was spent on each 1V1D project. This totals approximately GH₵381,900,000, with consultancy fees—10% of the contract sum—amounting to GH₵38,190,000. These figures primarily represent procurement-related expenditures.

We are unable to track policy outcomes effectively regarding how the establishment of dams in villages may have improved irrigation in farming areas or reduced food costs and operational expenses for farmers, ultimately increasing the availability of food in our markets. However, there is a lack of documentation that addresses the policy intervention components of these promises or their outcomes.

Media coverage often focuses predominantly on the procurement aspects, neglecting the outcomes associated with these initiatives.

A key public policy interest lies in understanding how government promises are shaped by policy documents that clearly outline financing sources, expected outcomes, and outputs. This approach enables us to track and properly evaluate these policy interventions and measure their effectiveness.

While this may not be an exhaustive exploration of the policy components related to our December 7th elections, it serves as a foundational discussion in a series aimed at addressing our expectations as active citizens in Ghana’s governance. Through public policy engagement, we can ignite conversations about good governance.

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