Ghana’s Ex-President Gets Massive Mandate to Fix Inflation Woes

Ghana’s Ex-President Gets Massive Mandate to Fix Inflation Woes

Ghana voted ex-President John Mahama to return to the role he served in eight years ago, handing him a strong mandate to fix the West African nation’s crippling debt burden and high cost of living.

The leader of the National Democratic Congress, who ran the country for about five years, won by the biggest margin in about two decades in the Dec. 7 presidential elections, getting about 56.6% of the vote, the Electoral Commission said on Monday. The ruling-party candidate, Mahamudu Bawumia garnered 41.6%. Mahama’s NDC will also control at least 60% of the seats in parliament, Joy TV reported.

“This shows that the Ghanaian people have little tolerance for bad governance,” Mahama said in his victory speech late Monday at his party’s headquarters in the capital, Accra. “This mandate also serves as a constant reminder of what fate awaits us if we fail to meet the aspirations of our people.”

Walmart Inc.’s Game, Delivery Hero SE’s Glovo and Jumia Technologies AG have all exited West Africa’s third-largest economy in the past few years. Wooing such investors, repaying as much as $2 billion of local debt — while staying locked out of the capital markets — and slowing double-digit inflation will test the incoming administration of the world’s second-biggest cocoa producer.

With more than a fifth of Ghanaians below the age of 35 unemployed, Mahama’s honeymoon period likely won’t last long unless he helps companies — which say they won’t survive the next decade if ease of doing business doesn’t improve — create jobs.

“Let us be brief in our celebration for the weight of office will be an onerous one,” Mahama said above the sound of vuvuzelas.

History shows past leaders with large mandates failed to live up to expectations. President Nana Akufo-Addo’s beat Mahama in the 2016 election, winning 53.6% support, but by the end of his two terms voters were so disillusioned with the government that just 61% of the electorate came out to vote. That compares with a turnout of 79% in 2020, when Akufo-Addo defeated his rival for a second time.

Mahama’s previous track record as the country’s leader also wasn’t stellar — his tenure was marred by an economic downturn and frequent electricity blackouts. But the professional communicator was able to convince voters that he was the better of their main options in a country where power has rotated between two political parties since 1992.

“Our aim now is stability,” Mahama, 66, told Bloomberg in a Nov. 6 interview. Bringing down inflation and stabilizing a currency that’s lost 61% of its value over the past four years will be among his team’s priorities, he said at the time.

Yield on Ghana’s 2035 dollar-denominated bonds fell for an eighth day on Monday. It was down 10 basis points to 9.52%, the lowest level since the securities were listed in October.

Investors will now keenly watch out for Mahama’s choice of finance minister.

“We believe financial markets are likely to react more positively to a credible outsider who not only holds financial market experience, but also comes with solid reform credentials to help reset the economy after what has been a rather painful debt-restructuring exercise,” Michael Kafe, an economist at Barclays Plc said in a note to clients on Monday.

Once an investor darling, Ghana is only just starting to recover from one of its worst economic and debt crises. In 2022, the country reluctantly sought a $3 billion bailout from the International Monetary Fund because it couldn’t keep up with debt payments that were eating up more than half of government revenues. Its annual inflation meanwhile exceeded 20% for more than two years, accelerating to 54.1% in December 2022.

Mahama plans a national dialog in his first 120 days in office to produce “a homegrown fiscal consolidation policy that will feed into an economic recovery program,” he said in last month’s interview. The NDC’s commanding win in the parliamentary elections should make it easier to push the program and other elements of his legislative agenda.

Getting the economy back on track will require tough decisions, said Nana Wiafe Boamah, the chief investment officer at Axis Pension Trust, the country’s third-largest private pension fund with $600 million in assets. The dialog, set to bring together different segments of society including organized labor and students, will help Mahama “galvanize national support to adopt the difficult but necessary policies,” he said.

The relatively peaceful vote and Bawumia’s concession should go some way toward helping the nation woo investors in a region where authoritarian regimes have been on the rise.

“Bondholders will be pleased to see how Ghana remains a beacon of democracy and stability in Africa,” said Giulia Pellegrini, senior portfolio manager for emerging-markets debt at Allianz Global Investors, part of Allianz SE that holds Ghana debt. “Bondholders will also look to President-elect Mahama to stay the course or even deepen necessary economic reforms.”