Peaceful Transition: Foundation for sustained economic stability

By Prof. Samuel Lartey

Introduction

GHANA has once again demonstrated its commitment to democracy with a peaceful transition of power following the 2024 presidential election.

Former President John Dramani Mahama of the National Democratic Congress (NDC) was declared the winner, marking his return to leadership after a landslide victory.

The concession by his main opponent, Dr. Mahamudu Bawumia of the New Patriotic Party (NPP), even before the Electoral Commission’s official declaration, underscores Ghana’s reputation as a stable and democratic beacon in West Africa.

This peaceful election has far-reaching implications for Ghana’s business environment and its attractiveness to investors.

Democracy and Investor Confidence

Elections in any country serve as a litmus test for its political stability, a factor that heavily influences investor confidence. Ghana’s ability to conduct peaceful elections reassures both domestic and foreign investors about the country’s stability.

In an era where political uncertainty can discourage investment, the smooth concession by Dr. Bawumia is a positive signal to the global business community.

According to the World Bank’s Ease of Doing Business Index (2020), Ghana ranked 118th out of 190 economies, with significant progress in areas such as starting a business and protecting minority investors.

With the peaceful transition of power, Ghana has a strong opportunity to climb the ranks further, creating a favorable climate for entrepreneurship and innovation.

Business and Economic Stability

A peaceful election creates the foundation for sustained economic stability. Ghana, which has grappled with high inflation, 23.0% as of November 2024, and debt levels reaching 89% of GDP in 2023, requires a strong and stable government to implement reforms.

The incoming administration’s focus on economic recovery and fiscal responsibility will be closely watched by investors.

Businesses thrive on predictability. A chaotic election outcome could have led to disruptions in supply chains, currency instability, and capital flight. However, Mahama’s victory and Bawumia’s concession set the stage for continuity, allowing businesses to plan long-term investments.

Global Perception and Foreign Direct Investment

Ghana’s image as a peaceful democracy directly impacts its ability to attract Foreign Direct Investment (FDI). Data from the Ghana Investment Promotion Centre (GIPC) shows that FDI inflows amounted to $2.6 billion in 2022, a figure that is likely to rise if investor confidence remains high post-election.

Sectors such as manufacturing, renewable energy, and technology are poised to benefit as global companies seek a politically stable base in Africa.

Furthermore, Ghana’s peaceful elections enhance its reputation as a gateway to West Africa. With ECOWAS advocating for stronger economic integration, Ghana can leverage its political stability to attract regional investors and multinational corporations looking for a reliable hub.

Key Industries and Opportunities

            •          Technology and FinTech

Ghana’s tech and fintech sectors have been among the fastest growing, with mobile money transactions reaching a staggering GH₵1.2 trillion ($100 billion) in 2021. The peaceful election signals continuity in policy, encouraging further investment in these sectors.

            •          Energy and Infrastructure

With President Mahama emphasizing renewable energy development during his campaign, the energy sector could see increased investment. Solar energy, in particular, is positioned to drive sustainable development, reducing Ghana’s reliance on hydro and fossil fuels.

            •          Agriculture

Agriculture remains Ghana’s largest employer, contributing approximately 20% to GDP. Political stability ensures the smooth implementation of policies aimed at improving productivity, reducing post-harvest losses, and increasing exports.

Implications for Local Businesses

Domestic businesses also stand to gain from the stability brought by peaceful elections. A secure environment fosters entrepreneurship reduces the risk of disruptions, and allows local businesses to expand operations.

Access to financing, a major challenge for small and medium enterprises (SMEs), is likely to improve as banks and microfinance institutions regain confidence in the economy.

The Way Forward

The peaceful 2024 elections offer Ghana a unique opportunity to consolidate its democratic gains and drive economic recovery. However, the incoming administration faces significant challenges, including tackling inflation, managing public debt, and creating jobs for the youth.

To capitalize on the goodwill generated by the peaceful elections, Ghana must:

            •          Strengthening governance:

Transparent and accountable leadership is essential for sustained investor confidence.

            •          Promote public-private partnerships:

Collaborations in infrastructure, energy, and education can drive growth.

            •          Address unemployment:

With youth unemployment at 12% (2023), targeted interventions in skills development are critical.

            •          Enhance regional trade:

Leveraging the African Continental Free Trade Area (AfCFTA), headquartered in Accra, can boost exports and diversify the economy.

Conclusion

Ghana’s peaceful 2024 elections reaffirm its position as a beacon of democracy in Africa, a reputation that resonates deeply with investors and businesses.

By prioritizing economic stability and implementing pro-business policies, the incoming administration has the chance to propel Ghana into a new era of growth and prosperity. As businesses, both local and international, look to Ghana with renewed interest, the country must seize this moment to cement its role as a preferred destination for investment and innovation.