Deloitte has reported that approximately 50 countries, including several in West Africa, are holding elections this year.
For Ghana, which will hold its elections on December 7, 2024, the current economic climate and citizen welfare will play a critical role in shaping voter decisions and assessing campaign promises.
Deloitte’s West Africa Economic Outlook for August 2024 notes that Ghana’s economy, heavily reliant on cocoa and gold, is facing significant macroeconomic challenges.
These include high inflation, currency weakness, and rising debt levels, which are expected to influence policy direction and investor sentiment.
The report projects that inflation and currency volatility will persist in West Africa, particularly impacting Ghana and Nigeria.
Deloitte highlights that the region’s macroeconomic environment remains strained, characterized by elevated interest rates and significant debt burdens.
As a result, consumers are likely to experience decreased purchasing power, while businesses face higher operating costs.
Both households and businesses are already adopting cost-cutting measures to cope with these economic pressures.
The International Monetary Fund (IMF) has revised its growth forecasts for the region.
Due to Nigeria’s revised outlook, the IMF adjusted its 2024 growth estimate to 3.1% from 3.3% and reduced Sub-Saharan Africa’s growth forecast to 3.7% from 3.8%.
Ghana’s economy is projected to grow by 2.8% in 2024 and rebound to 4.4% in 2025.
Deloitte’s analysis points to the rising cost of goods and services as a significant constraint on West Africa’s economic output.
Nigeria and Ghana are experiencing currency volatility that has impacted their ability to import essential raw materials and equipment.
In the first half of 2024, the Nigerian naira lost over 40% of its value against the US dollar, while the Ghanaian cedi depreciated by over 20%.
Nigeria’s economy grew by 2.98% year-on-year in the first quarter of 2024, an improvement from the 2.31% growth recorded in the same period of 2023 but a slowdown compared to the 3.5% growth in the final quarter of 2023.
The finance and insurance sector, water supply, and waste management sectors were significant growth drivers. In contrast, the oil and gas sector, crucial to Nigeria’s economy, grew by 5.7% after a period of contraction. Conversely, the agriculture sector’s growth remained sluggish at 0.18%.
In Ghana, the economy grew by 4.7% year-on-year in the first quarter of 2024, with the industrial sector leading at 6.8% growth.
The agriculture and services sectors experienced slower growth at 4.1% and 3.3%, respectively.
Ghana is recovering from a debt crisis. The ongoing restructuring of its $30 billion debt and the implementation of monetary policy measures by the Bank of Ghana are contributing to reduced inflation.
The country has secured approval for two tranches of IMF disbursements this year, totalling $1.56 billion since 2023.
Deloitte’s report underscores the economic challenges facing West Africa and their potential impact on the upcoming elections, highlighting the need for policymakers to address these issues effectively.
