Saturday, April 13, 2024



Ghana Flag

GDP: USD72.8bn (World ranking 77)
Population: 33.5mn (World ranking 47)
Form of state: Constitutional Democracy
Head of government: Nana Akufo-Addo (President)
Next elections: 2024, Presidential and legislative


  • Established track record of good governance, with a functioning democratic system and peaceful transfer of power among political parties and strong economic growth
  • Natural resource base (cocoa, gold, forestry etc.,) now supplemented by the discovery of commercially exploitable oil reserves
  • Market-oriented policy framework and overall positive relations with international financial institutions


  • Effects of the selective default in late 2022 and the relative restructuring have alienated businesses, while continuing twin deficits (fiscal and current account) require careful management
  • High exposure to sell-off pressures in emerging economies with periodic risk of currency depreciation, FX reserve depletion and payment crisis
  • While some safeguards are established, the capability to manage oil wealth is yet to be tested as well as spillover effects from prolonged regional instability

Economic overview

Inflation will remain elevated throughout 2024

In 2022, Ghana’s economic growth decreased because of the sovereign crisis and activity reduced further in 2023 at an estimated +1.5%, bringing the pace of economic growth close to the almost 30-year record low of +0.5% in 2020. Non-extractive industries led the downturn because they were hit the hardest by the widespread slowdown brought on by falling corporate and consumer confidence, as well as the challenging external situation. The non-extractive sector grew at around +1% on average in 2022-2023, the slowest pace since the 1980s. If positive demographics are  considered, this indicates a decline in living standards, while a moderate recovery is forecast in the second half of 2024, bringing the annual GDP growth to around +3% for 2024.

Currency depreciation has paused, giving some respite to businesses and banks. In December 2022, Ghana ceased to make payments on its external debt to official bilateral and external commercial creditors, leading to haircuts onsovereign debt and domestic debt as well. Gross international reserves fell to USD1.1bn (0.5 months of imports) at the end of February 2023, USD5bn below the level of mid-2021, due to FX interventions by the Bank of Ghana to reduce volatility. As a result of these factors, the value of the Cedi has dropped by -50% between 2022 and early 2023. The agreement reached with the International Monetary Fund in mid-May 2023 was the first step towards a comprehensive debt-restructuring process involving the G20 group, including China, as well as domestic creditors and has helped contain currency depreciation since.

Inflation will stay elevated throughout 2024. Prices rose sharply in late 2022, hitting +54% y/y in December and remained elevated throughout 2023, closing the year at around 23% (i.e., 15 points above the target) on a downward trajectory. However, food price inflation remains elevated, due to a persistent lack of confidence as well as poor financial and logistical alternatives. The central bank has hiked its policy rate by a total of 15.5pps since early 2022 to reach 30% in July 2023. To increase financial stability at the expense of credit growth, it also extended the reserve requirement from 8% to 14%. We expect inflation to remain in the double digits for 2024 as well, with interest rates declining visibly in the second half of the year only.

The economy is set to recover in the medium term

Growth is predicted to remain muted over the coming years, with inflation returning to single digits in 2025. Starting in 2026, growth is expected to begin rising again towards its long-term potential of about +5%. The anticipated development of oil and gas production , as well as the opening of new gold mines, are all contributing factors to the extractive industry’s robust performance. Exposure to negative terms-of-trade shocks from Ghana’s overreliance on commodities will be partly mitigated by the variety of the export basket, which includes gold, crude oil and cocoa (80% of total exports).

Debt restructuring may set a positive precedent for other countries in the region. Due to its excessive debt levels in comparison to regional peers, Ghana became the fourth African country (after Chad, Zambia and Ethiopia) to request bilateral debt restructuring under the Common Framework platform sponsored by the G20. Absorbing the losses will take time and reduce the economic impulse, particularly in th  case of the banking sector and companies exposed to state- owned entities. However, the institutional and legislative platform remains sound and will help rebuild the economy once a comprehensive agreement with all the creditors isreached.

Ghana’s attractiveness has significantly improved over the past few years, thanks to recent business-friendly reforms, enhanced connectivity and the availability of digital services. Ghana was one of the first countries to ratify the African Continental Free Trade Agreement in 2018 and retains strong potential to become a trade and logistics hub for West Africa.

Leadership may shift, fiscal consolidation likely to endure

Ghana’s performance in terms of civil liberties, rights and political stability exceeds that of most African peers. Independent poll observers generally deem general elections in Ghana to be free and fair. The high electoral turnout rate (79% in the 2020 presidential election) testifies to the state’s credibility and to the country’s democratic achievements. Ghana’s strong record of accomplishment in democracyand rule of law is expected to prevent any serious socialdisorder, although the post-pandemic rises in unemployment and poverty, along with rising food and energy prices, have spurred discontent in recent years. Poor working conditions in the public sector and a lack of economic possibilities for young people are eroding trust in institutions. Future demonstrations may be temporarily disruptive but mostlypeaceful and concentrated in urban centers.

Political life in Ghana will be defined by their bitter competition if the New Patriotic Party (NPP) retains power by a narrow margin and the National Democratic Congress (NDC) leads the opposition. With only 137 seats and the assistance of one independent member out of a total of 275, the NPP’s working majority in parliament makes it difficult to pass contentious legislation. Policymaking will be delayed throughout the rest of the government’s term because of the difficulty of reaching consensus on key legislation (particularly revenue-mobilizing acts).

As a result of anti-establishment sentiment and public anger with the current government over decreasing living standards, a transfer of power at the December 2024 election

looks likely. Given the lack of budgetary headroom, we do not expect the present or next administration to be able to counteract the consequences of growing living costs through the imposition of subsidies, resulting in long-term popular anger and unrest. Nonetheless, policy will continue to concentrate on sustaining macroeconomic stability, given Ghana’s long history of democratic rule.

CEOWORLD magazine - Insights - Ghana