Bloomberg News

Ghana Leaders Bid for Office as Voters Seek Oil Benefits

December 06, 2012

Ghanaian voters will decide tomorrow whether President John Dramani Mahama’s party has done enough to spread the benefits of one of Africa’s fastest-growing economies as he tries to fend off a challenge from opposition candidate Nana Akufo-Addo.

Neither Mahama nor Akufo-Addo, whose parties have traded power in the two decades since Ghana ended military rule, may secure the minimum of 50 percent needed to win in the first round, according to analysts from Standard Bank Group Plc, Songhai Advisory, Renaissance Capital and Eurasia Group.

The winner will face mounting calls from Ghanaians to share wealth from oil production that began in 2010. Spending promises made on the campaign may be hindered by a widening budget deficit and slowing economic growth in a nation where 18 percent of the population have formal employment, according to the 2010 census. After expanding 14.4 percent in 2011, the fastest pace in Africa, Ghana’s economy is projected to grow 8.2 percent this year and 7.8 percent in 2013, according to the International Monetary Fund.

“There’s a real frustration about the economic growth Ghana is supposed to be having,” Songhai’s Kissy Agyeman-Togobo said by phone from Accra, the capital, on Nov. 28. “People have been complaining about the general costs of living and not really benefiting from the oil revenues that were said to come in.”

Jubilee Oil

Tullow Oil Plc (TLW) started pumping crude at the Jubilee field in December 2010. Production slowed to an average of 63,000 barrels of oil equivalent a day in the first half of this year, according to the central bank. Tullow said 2011 production averaged 78,200 barrels and by the end of 2012, output is expected to increase to 90,000 barrels.

Tullow, Anadarko Petroleum Ltd. and Eni SpA are developing more wells, while AngloGold Ashanti Ltd. (ANG) and Newmont Mining Corp. (NEM:US) are expanding their gold mines after prices for the metal rose 8.1 percent this year.

Cocoa production, which reached a record 1 million metric tons in the 2010-11 season, may slow to 800,000 tons from the harvest that started in October, according to the Ghana Cocoa Board. Archer-Daniels-Midland Co. (ADM:US), Barry Callebaut AG and Cargill Inc. process cocoa in Ghana, the world’s second-biggest grower.

“I am struggling to take care of my family and to pay their fees, things are getting worse by the day,” 42-year-old Charles Kweku Annan, who drives a tro-tro, a public transportation minivan, said in an interview at a bus station in Accra, the capital, on Nov. 30. “Those economic figures are either lies or useless, they mean nothing to me.”

Growth Promise

Mahama, 54, became the ruling National Democratic Congress party’s candidate after the death in July of President John Atta Mills. Akufo-Addo, 68, of the New Patriotic Party, lost to Mills by less than 1 percentage point in the 2008 vote that went to a second round. Six other candidates are also contesting the presidency.

The 14 million registered Ghanaian voters will also choose members of a Parliament that’s expanded by 45 seats to 275 since the last election. The NDC held a majority in the previous term. While the electoral commission has 72 hours to release results, an announcement is likely within 48 hours, Kwadwo Afari-Gyan, head of the agency, told reporters yesterday.

A former communications minister and parliamentarian from the Northern region town of Damongo, Mahama, who was Mills’ deputy, is promising annual growth of 8 percent to “expand our economy from its marginal middle-income status to a full-fledged middle-income status where growth and prosperity are spread equitably across the country and poverty is substantially reduced,” according to his campaign manifesto.

Free Education

Akufo-Addo, a former attorney general and foreign minister, was born in Accra and represented the Eastern region constituency of Abuakwa South in Parliament. He vowed free high- school education and said he would “make a systematic effort to launch an industrial revolution and find new markets for Ghanaian products and services,” according to the NPP plan.

The NPP, which governed Ghana under John Kufuor from 2001 to 2009, is “liberal democratic and conservative,” while members of the NDC, founded by two-time coup leader Jerry Rawlings, are “social democrats,” according to the parties.

“There’s very little that separates them,” said Agyeman- Togobo. “They are both pro-business, they pledge to promote the private sector and they want to open up Ghana’s market to foreign investors.”

Deficit Widens

The election winner “will be significantly constrained by the need to rebalance state finances after a period of pre- election fiscal loosening,” Ben Payton, an analyst at Bath, U.K.-based Maplecroft, said in an e-mailed response to questions on Dec. 3. “The need to bring the deficit under control is likely to impact upon future spending plans, and force the government to delay or abandon key manifesto commitments.”

Ghana’s deficit soared to 7.3 percent of gross domestic product in the first three quarters of this year from 1.9 percent during the same period in 2011 as the government implemented a plan to boost wages for the country’s 700,000 civil servants, according to the Bank of Ghana.

“Some fiscal restraint next year will subsequently enable the BoG to start easing monetary policy, subject to sustained exchange rate stability,” Samir Gadio, an emerging-markets strategist at Standard Bank, said. “The country’s democratic credentials and improving institutional framework, coupled with the peaceful power shifts in 2000 and 2008, mitigate any major political risks.”

The cedi, which has weakened 13 percent this year, gained less than 0.1 percent to 1.8911 a dollar by 3:11 p.m., according to data compiled by Bloomberg. The yield on Ghana’s $750 million Eurobonds declined for a fifth straight day, easing 3.1 basis points to 4.963 percent, the lowest in more than three weeks.

Ivorian Violence

Ghana’s four elections since the return to constitutional rule in 1992 have been regarded as free and fair, with disputes handled through the electoral commission or in the country’s courts. In neighboring Ivory Coast, 3,000 people were killed and many fled into Ghana during violence that followed a disputed 2010 presidential election.

While the campaign has been largely calm, at least five clashes were reported during the voters’ registration period earlier this year and two people were shot and injured during an NPP meeting in Kumasi, the second-biggest city, on Nov. 29. Preserving the peace in the country became a recurrent campaign theme, with celebrities, religious leaders and school children recording songs and making pledges.

“The fears of electoral violence will be with us every four years, as the winner-takes-all system remains,” Michael Kpessa Whyte, a political scientist and research fellow with the University of Ghana’s Institute of African Studies, said by phone yesterday. Ghanaians “will vote for the candidate who they can trust with the peace and stability of the nation, anything else comes second.”

To contact the reporters on this story: Pauline Bax in Accra at pbax@bloomberg.net; Ekow Dontoh in Accra at edontoh@bloomberg.net

To contact the editor responsible for this story: Emily Bowers at ebowers1@bloomberg.net


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