The Economic Intelligence Unit (EIU) has predicted victory for the flag bearer of the New Patriotic Party (NPP), Nana Addo Dankwa Akufo-Addo, in the December presidential election.
The NPP, it predicted, would also win majority of seats in Parliament, attributing that possible outcome to Ghanaians’ frustration with the country’s poor economic performance under the President John Dramani Mahama-led administration.
“We expect Nana Akufo-Addo and the NPP to be victorious in the December presidential and legislative elections, given popular frustration with Ghana’s poor economic performance under the recent National Democratic Congress (NDC) administration,” a report released by the EIU yesterday said.
NPP must work harder
The report added, however, that that outcome was by no means a foregone conclusion, saying the results were likely to be close, adding that the NPP would need to work harder to attract votes from outside its stronghold in the Ashanti Region, while maintaining internal unity.
Meanwhile, the NDC, it said, would continue to enjoy strong support in the east and the north of the country owing to historical and tribal allegiances, while the Greater Accra Region, historically a swing region, would be a key battleground, leading to tension in the region that could disrupt business operations.
“We expect a transition of power from the NDC to the NPP in 2017 after the December 2016 elections, although there is a notable prospect of disputed results,” the report said.
Reaction from the NPP
The Spokesperson for Nana Akufo-Addo, Mr Mustapha Hamid, said polls ought to be authenticated by the objective conditions on the ground and that for him and the NPP, the conviction that the party was going to win the elections was based on the despondency being expressed by the totality of Ghanaians.
“When I see the excitement and the cries by the people as we travel around the country and as we witness the dejection and anger of the good people of Ghana because of the suffering they are going through, then it becomes clearer that the people are enthusiastic about change and I do not need the EIU report to tell me that we are going to win,” he said.
NDC speaks
But the First Deputy General Secretary of the NDC said the party did not need the polls report of the EIU to know its fate regarding the elections.
“We are not basing our work on the output of that report. I know the extent to which we have sent development to every nook and cranny of this country. The EIU does not exist in the nook and cranny of this country. It can afford to sit anywhere and do its radio country and town reports,” he said.
For the NDC, they were confident of their track record and optimistic, therefore, that they would win the elections.
Post-election stability
According to the EIU, January 2017 should see the next administration take power, but the likelihood of a second round of the presidential election, coupled with the distinct possibility of disputed results, amid a tense political environment, could disrupt that transition.
Post-election acrimony, it said, could well lead to outbreaks of unrest between rival supporters of the two main parties, the NDC and the NPP.
“Political stability in the remainder of 2017-2021 will be assured by Ghana’s strong democratic structure. However, such a competitive political arena will occasionally spill out into unrest between and within political factions,” the report said.
Despite the notable risk of significant political instability and potentially even social unrest during 2017, it said, it did not expect any breakdown in Ghana’s overall stability, even assuming the election results were disputed.
It noted that Ghana had one of the strongest democracies on the continent and was not historically prone to widespread violent upheaval.
Election dispute and the Judiciary
Although the Judiciary had weaknesses, as shown by the corruption exposé by the investigative journalist, Anas Aremeyaw Anas, in 2015, the Judiciary, it said, was generally regarded as competent in political matters which should ease the process if the election results were contested legally, as it was done in 2012.
The report said there was also a notable upside risk that one of the parties would win by a convincing enough margin that the result would be accepted and the political scene would normalise quickly.
“Under either scenario, we would expect political tension to subside as the election aftermath is concluded, the new government settles in and the wider economy stabilises before another spike in tension ahead of the 2020 elections,” the EIU predicted.
Economics
Both main political parties, the report said, had pledged ambitious industrialisation projects, spending on which would likely see fiscal consolidation targets agreed with the IMF missed, albeit not by a magnitude to risk donor support.
Real GDP growth, it said, would be boosted to an average of seven per cent a year in 2017-2018 by new oil and gas production, before moderating to 5.6 per cent in 2019-2021 amid weaker global prospects.
It added that inflation would come down relatively in 2017-2018 amid generally tighter policy but higher global commodity prices and that after a slight election-related uptick in 2020, inflation would ease a little further in 2021 to an average of 8.7 per cent.
The cedi, it said, would become more stable in 2017-2018 as oil earnings grew and policy stability improved, before electoral uncertainty and weaker global conditions would cause renewed volatility in 2019-2020.
“The current account deficit will narrow in 2017-2018 in dollar terms as oil production increases but widen in 2019-2020 as a result of lower prices. A contraction is then forecast in 2021 as the local and global economy recovers,” it indicated.
According to the report, government coffers would receive a boost in 2017 as the Tweneboa-Enyenra-Ntomme (TEN) oilfields got up to full production, although in an environment of low oil prices which would not have a transformative effect on government finances.
Spending restraints
“Spending restraint will still be needed, which will be difficult, as the next government establishes itself and its policy priorities. As a result, although the fiscal deficit is expected to come down to 4.7 per cent of GDP, it will be above the initial ECF target of 3.7 per cent of GDP. Stronger economic growth and further expansion in oil and gas revenue, coupled with modest spending restraint, will help the deficit come down to 3.2 per cent of GDP in 2019,” the report predicted.
It also forecast an election-related increase to four per cent of GDP in 2020, saying that rise would be much less significant than in 2008 or 2012.
However, it said a return to fiscal consolidation would then be on the agenda in 2021, with the deficit back down to 3.2 per cent of GDP, and that although the next administration would not be immune to the temptation of populism ahead of elections, it would be wary of repeating the damaging past excesses.
“Public debt will come down only gradually from its 2016 peak of over 70 per cent of GDP in 2017-21 (with an election related uptick in 2020) as, although the fiscal deficits are generally contracting, they are still significant. Longer-term debt sustainability will require a sustained period of fiscal responsibility and continued robust levels of economic growth,” the report said.
Threat to social stability
Meanwhile, a threat to social stability, it said, would come from labour unrest.
It said the next government and whichever party formed it would face a tight financing situation, with public employment cuts, slow wage growth and privatisation all likely to be on the agenda and all unpopular with the labour unions.
“There have been strikes by health, educational, judicial and energy sector employees in recent times, with such action likely to continue in the forecast period. Industrial tensions will be fuelled by the fact that the oil-related bump up in economic growth expected in 2017 is not likely to translate quickly into rising living standards, given the relatively isolated nature of that section of the economy and a low oil price environment that will limit the boost to government coffers,” it said.
The report was, however, emphatic that although protests over economic conditions could disrupt business activities, they would not be of a scale to unsettle overall stability.
It also said Ghana had performed relatively well under its extended credit facility (ECF) with the IMF, which would re-assure donors and bilateral lenders, bolstering relations.
However, it said there were likely to be policy slippages in the immediate aftermath of the election period as the next government took time to settle in and balance an IMF-approved policy agenda with pre-election promises of ambitious investment schemes.
Subsequent elections
Subsequent national elections, the report said, would then be due in 2020 and whichever party won in 2016 was expected to preside over an improving economic situation and that would bolster its support in 2020, making re-election the most likely outcome.
“However, Mr Mahama would be constitutionally barred from standing again if victorious in 2016, so the NDC could face a damaging internal battle over who will succeed him, which may play into the hands of the NPP. If Nana Akufo-Addo is victorious in 2016, he will be eligible to stand again in 2020 but would be 76 years by then and so will probably face challenges from within his party,” it predicted.
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