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09.02.2009 Feature Article

Complacency and corruption cost the NPP

President Atta MillsPresident Atta Mills

Newly elected Ghanaian president, John Atta Mills, must not only build on the economic reforms of his predecessors but also tackle the complacency and corruption that cost the NPP the election, writes Jon Offei-Ansah

Ghana has strengthened its credentials as one of the very few genuine democracies in Africa with the election of John Evans Atta Mills of the opposition National Democratic Congress (NDC) as the country's next president. He was inaugurated on January 7.

But last month's poll, the fifth successive election since 1992, was the most dramatic. Ghanaians entered the New Year uncertain about the country's political future, anxious that the significant progress in the development of the country's democracy was about to be derailed. The tension that pervaded the country in the aftermath of an inconclusive run-off on December 28 created fears that the violence that erupted after Kenya's elections a year ago and the meltdown in Zimbabwe might be replicated in the country.

The nation went to the polls on December 7 to choose a successor to the outgoing President John Kufuor, who was stepping down after serving the maximum two four-year terms allowed under the Ghana constitution. Neither of the two main candidates Nana Addo Dankwa Akufo-Addo, of the ruling New Patriotic Party (NPP), nor Mills got the required 51 per cent of the votes to be declared the winner in the first round of voting, which was praised by international observers as orderly, free and fair and a model for Africa. Akufo-Addo garnered just over 49 per cent, more than one percentage point ahead of Mills, but failed to gain more than 50 per cent of votes required to carry the ballot.

In what was to become one of the closest leadership elections in Africa, the second ballot was a cliff hanger, with just over 23,000 votes separating the two contestants, but this time with Atta Mills ahead of Akufo-Addo. Then the drama began amid allegations of vote tampering from each side and the NPP's initial refusal to concede defeat. Hundreds of NDC supporters besieged the offices of the electoral commission, demanding that Atta Mills be declared the winner. There were reports of police firing warning shots in a bid to prevent the protest escalating into what most people feared – violence.

In what some observers described as a 'master stroke' by the chairman of the electoral commission, Kwadwo Afari-Gyan, who has supervised all elections since 1992, the run-off was declared too close to call and, since logistical problems had prevented one constituency in a cocoa-growing area – Tain – from voting in the run-off, voters there would decide the eventual winner. In the first round of elections, Mills and the NDC won both the presidential and parliamentary ballots in Tain by a comfortable margin. Therefore with defeat staring them in the face, the NPP attempted to prevent the Tain vote going ahead with a court injunction that was thrown out by the judge. The party then announced a boycott but the vote went ahead with Mills winning by a big majority.

Little separates the two parties in terms of economic policy but 64 year old Mills won because the majority of Ghanaians wanted change despite the increased economic growth of recent years. Under Kufuor, Ghana had attracted growing foreign investment and is fast becoming the business hub of the West African sub-region. When it assumed power in January 2001 on a wave of electoral goodwill, the NPP instituted a programme of sweeping reforms that cut the fiscal deficit sharply by eliminating fuel subsidies, with Kufuor declaring a 'golden age of business.'

It also restructured the domestic debt, set the country on a path towards comprehensive external debt relief under the HIPC and multilateral debt relief initiative (MDRI) programmes and fostered a period of accelerated growth, helped by the global environment. During that time, cocoa benefited from rising prices as a result of the conflict in neighbouring Cote d'Ivoire, the world's largest producer. Ghana also experienced bumper cocoa harvests, while the price of gold, another key export, also surged – Ghana is Africa's second biggest gold producer and the world number two cocoa exporter. In addition, oil prosperity beckons with the discovery of huge reserves that will start pumping in 2010.

But it was not all smooth sailing. The price of imported oil also increased, testing the reform credentials of the NPP government, and necessitating sharp adjustments in domestic fuel prices, until subsidies were done away with entirely. Although the Bank of Ghana was made independent, and inflation was declined from more than 40 per cent in 2001 to just over single digits, Ghana was never able to reduce it further. More recent shocks, including the surge in the price of imported oil and food, saw inflation peak at over 18 per cent.

However, the Kufuor government's record of attracting investment and extending health and education services has been undermined by widespread suspicions of graft. Critics of his administration say it failed to tackle widespread corruption, including smuggling of cocaine and other drugs in which administration officials have been implicated. 'There is that perception of corruption in the country, there is that belief that resources have not been shared equitably,' University of Ghana lecturer in international affairs Yao Gede told Reuters.

Tonnes of cocaine have vanished from police surveillance, while an NPP parliamentarian, Eric Amoateng, is serving a prison sentence in the US for heroin trafficking. Amoateng was arrested in 2005 for smuggling 136lbs of heroin into New York's Newark airport. He was jailed in 2007 by a US court after resigning his seat but enjoyed significant support from fellow NPP MPs and constituents who regarded him as a philanthropist. Tackling the drug trade to Europe from Ghana is one of the challenges facing Atta Mills. 'Although Ghana is just a transit point for drugs, there is an increasingly organised framework within which these transactions take place,' says Kwesi Aning, head of conflict prevention at the Kofi Annan Peacekeeping Training Centre in Accra.

Atta Mills, former vice-president of Ghana under Jerry Rawlings, must also restore stability to the economy – a difficult task considering the external shocks recently weathered by Ghana. Last year was tough, with analysts estimating the fiscal deficit at more than 10 per cent of GDP. 'Ghana's current account deficit may be as high as 15 per cent of GDP.

'Whereas only a year ago [2007] foreign financing of Ghana's debt was relatively easy, as evidenced by the successful launch of the country's first Eurobond, the credit crunch has changed much,' said Razia Khan, head of Africa research at London's Standard Chartered Bank. The price at which Ghana's debt now trades suggests that further external borrowing will be prohibitively expensive.

The picture on the domestic front is also not much more encouraging. The recent spike in inflation, worsened by significant currency volatility, has resulted in a significant fall in the average maturity of Ghana's domestic debt. Given the extent of the deterioration in the domestic debt, even the recent sharp decline in the price of oil does not, on its own, promise a much-improved inflation outlook. Therefore a package of austerity measures will be needed, with tight fiscal and monetary policy, even as the country moves closer to eventual oil-producer status.

Despite the external shocks weathered by the economy, the evidence on growth remains very upbeat. Although foreign portfolio investors scaled back their activities with the onset of Ghana's balance of payments crisis earlier last year, the Bank of Ghana's composite index of economic activity (CIEA) showed strong growth in the third quarter of 2008 rising 6.8 per cent over the quarter. 'In year-on-year terms this apparently equates to a rise of 25.4 per cent, surpassing even the healthy trend of recent years,' Khan noted. The Bank of Ghana monetary policy committee (MPC) statement at the end of October also noted a rebound in both business and consumer confidence, with the sectoral evidence suggesting a faster pace of economic activity.

Ghana has attempted to borrow against future oil receipts, but the decline in the price of oil has made this difficult. As much as cheaper oil in the interim period benefits the economy, the decline in oil also takes a little shine off Ghana's eventual status as an oil producer, introducing a new element of uncertainty into the outlook. Ultimately, the costs and benefits of cheaper oil need to be weighed up. Production from the offshore Jubilee field is expected to begin next year, with recoverable resources estimated to be between 500 million and 1.8bn barrels. The oil companies involved are independent producers without access to the huge retained earnings that an oil major might have to see it through the financing crunch that now threatens oil supply globally.

Nonetheless, developments are understood to have been at an advanced enough stage before the onset of the credit crisis to suggest that this will not be a key variable in Ghana's emergence as an oil producer. Funding is thought to be in place and the reduction in related oil services costs should also prove beneficial. But this will not ease the financing constraint facing the new government, until production gets underway, and it sees its share of the oil revenue.

Atta Mills has vowed to be an inclusive president. 'There will be no discrimination. Atta Mills will be father to everybody,' he said in an address to his supporters in Accra. 'My dream is that Ghana in this century will be the nation that leads Africa. An educated, thriving, and prosperous democracy, that we can hold up as an example to the world of what Africa can be, when its people move and work together.' But analysts see possible downside risks to the new government implementing its policies.

Two of the parliament's 230 seats still need to be declared by the electoral commission, which is handling outstanding constituency issues, and the parliament now appears split, with the NDC holding 114 seats and the NPP 107.

'Either way the [new president] is likely to face hostile and acrimonious parliament that his party won't be able to easily control,' said Sebastian Spio-Garbrah, Africa analyst of the New York-based consultancy, Eurasia Group. 'Post election co-operation on basic items such as passing budgets and endorsing ministerial appointments could be held up, to the consternation of foreign investors,' he added.

NewsAfrica, © 2009

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