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<p>Special voting is currently underway in Ghana for members of the military, police, media and special service providers ahead of the December 7th polls. Meanwhile, a joint mission from the African Union and the Economic Community of West African States &#8211; ECOWAS, is in Ghana to monitor the proceedings for next week. John Gatsi, Dean of Business at the University of Cape Coast tells CNBC Africa’s Kenneth Igbomor what Ghana’s current political climate means for its economy.</p>


Ghana Elections: John Gatsi on the effect of elections on Ghana’s economy

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<p>Ghanaians will head to the polls to elect a new president and 275 members of parliament come Monday the 7th of December.</p>


2020 elections: Assessing the state of Ghana’s democratic institutions

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<p>Fitch Solutions says Ghana&#8217;s real GDP growth is expected to slow by 1.2 per cent this year and return to robust growth of 4.8 per cent in 2021. On the currency, Fitch says it expects the Ghanaian cedi to depreciate by 6.4 per cent against the greenback next year. Ahead of Ghana’s presidential election, William Attwell, Senior Country Risk Analyst for Sub-Saharan Africa at Fitch joins CNBC Africa for a focus on Ghana’s economy.</p>


Fitch: Ghanaian economy to grow at 4.8% in next fiscal


<p>Despite being one of the fastest-growing economies on the continent and offering a vast number of investment opportunities, Ghana unfortunately has one big hurdle standing in its way: fiscal finances.</p>



<p>Ghana can boast about its successes, but troubling government finances have been the norm, with fiscal slippages regularly occurring in election years.</p>



<p>The current Covid-19 pandemic is set to compound the problems for the country as government needs to support the economy through a fiscal stimulus injection.</p>



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="800" height="600" src="https://www.cnbcafrica.com/wp-content/uploads/2020/06/shutterstock_270259862.jpg" alt="" class="wp-image-374206" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2020/06/shutterstock_270259862.jpg 800w, https://cms.cnbcafrica.com/wp-content/uploads/2020/06/shutterstock_270259862-300x225.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2020/06/shutterstock_270259862-768x576.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2020/06/shutterstock_270259862-696x522.jpg 696w, https://cms.cnbcafrica.com/wp-content/uploads/2020/06/shutterstock_270259862-600x450.jpg 600w" sizes="(max-width: 800px) 100vw, 800px" /><figcaption>Ghana. Shutterstock </figcaption></figure>



<p>The Ghanaian government’s fiscal account is set for a marked deterioration this year.</p>



<p>The minister of finance, Ken Ofori-Atta, in his revised budget in July said that at that point 19 out of 28 state-owned organisations (SOEs) were projecting losses for this year.</p>



<p>When Mr Ofori-Atta addressed Parliament in March this year, he said that the total fiscal impact of Covid-19 is estimated at GH¢9.5bn (2.5% of GDP).</p>



<p>The overall fiscal deficit, considering the expected shortfall in revenues and extra expenditure, is now projected to rise by GH¢25.3bn (6.6% of GDP) to GH¢44.1bn (11.4% of GDP) in 2020, from a previous projection of GH¢18.9bn (4.7% of GDP).</p>



<p>Recently, the Monetary Policy Committee press release noted that for the first seven months of the year, local authorities recorded an overall budget deficit of 7.4% of GDP, which is wider than the target of 7.2% of GDP.</p>



<p>While revenues have come in slightly over target, it was significantly higher expenditures compared to target that resulted in the wider fiscal deficit.</p>



<p>As a result of the ongoing fiscal battle, S&amp;P Global Ratings (S&amp;P) lowered Ghana’s long-term foreign and local currency sovereign credit ratings to B- in mid-September, while the outlook is stable.</p>



<p>In April, the ratings agency warned that the Covid-19 pandemic is hurting medium-term fiscal consolidation plans.</p>



<p>S&amp;P says that the problems originally envisaged for the country have now materialised.</p>



<p>The slowdown in local economic activity has led to weaker tax revenue, while government spending rose sharply due to Covid-19-related support measures.</p>



<p>This has resulted in a much wider fiscal deficit than initially expected.</p>



<p>The ratings agency now forecasts the fiscal deficit to widen to 13.5% of GDP, which is in line with our own deficit forecast of 13.2% of GDP.</p>



<p>According to S&amp;P, the “scope for a sizeable fiscal adjustment post pandemic is likely to be limited”.</p>



<p>Furthermore, the medium-term targets published by local authorities point towards a much slower fiscal consolidation path.</p>



<p>The Fiscal Responsibility Act, which requires government to maintain the fiscal deficit below 5%, is also suspended for the time being.</p>



<p>According to the S&amp;P’s calculations, government debt will remain above 70% until 2023, while interest payments will likely cover half of fiscal revenue.</p>



<p>Although the fiscal shortfall has been fairly covered this year, it might be more difficult to access finance if the deficit remains at elevated levels next year.</p>



<p>The rating action by S&amp;P followed an announcement by Fitch Ratings in August that “the country’s slow fiscal consolidation may add to rating strains”.</p>



<p>The revised budget tabled by the minister of finance incorporated a much wider fiscal deficit than our initial forecast and, for that matter, the consensus forecast.</p>



<p>As a result, we adjusted our fiscal deficit forecast to 13.2% of GDP.</p>



<p>Our projection for fiscal expenditure has been brought in line with that of the revised budget; however, recent statistics point towards even higher overall expenditures for the year.</p>



<p>Despite revenues rising slightly over the first seven months compared to target, we still expect overall revenues to decline by year-end.</p>



<p>We are much more pessimistic on the government debt component, as we expect the debt-to-GDP ratio to remain above 80% over the medium term.</p>



<p>This is mostly a result of a more pessimistic view on economic growth and subsequently a lower nominal GDP base.</p>



<p><em>Pieter du Preez &#8211; Senior Economist</em></p>


shutterstock_310582601

Analysis – why Ghana is no longer the poster child for African economic reform


<p>LONDON/JOHANNESBURG (Reuters) &#8211; Ghana, Africa’s largest gold producer, is planning an up to $500 million listing of its gold royalty fund in London in October, though the deal could still run into political opposition, three sources familiar with the matter told Reuters.</p>



<p>Agyapa Royalties, a government-backed fund that holds equity interests including mining royalties in the state&#8217;s gold assets, has hired Bank of America&nbsp;<a href="https://www.reuters.com/companies/BAC.N">BAC.N</a>&nbsp;and JPMorgan&nbsp;<a href="https://www.reuters.com/companies/JPM.N">JPM.N</a>&nbsp;to pursue an initial public offering (IPO) on the London Stock Exchange this year, the sources said.</p>



<p>Royalties are payments that give the owner the right to receive a percentage of production from a mining operation, or retain a stake in them.</p>



<p>Ghana wants to take advantage of the precious metal’s strong performance this year to raise $400 million-$500 million from the IPO, the sources said. The fund’s shares will also be listed on the Ghanaian Stock Exchange.</p>



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="800" height="600" src="https://www.cnbcafrica.com/wp-content/uploads/2020/06/shutterstock_270259862.jpg" alt="" class="wp-image-374206" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2020/06/shutterstock_270259862.jpg 800w, https://cms.cnbcafrica.com/wp-content/uploads/2020/06/shutterstock_270259862-300x225.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2020/06/shutterstock_270259862-768x576.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2020/06/shutterstock_270259862-696x522.jpg 696w, https://cms.cnbcafrica.com/wp-content/uploads/2020/06/shutterstock_270259862-600x450.jpg 600w" sizes="(max-width: 800px) 100vw, 800px" /><figcaption>Ghana. Shutterstock </figcaption></figure>



<p>Yet, the listing could be derailed or pushed back because of resistance from Ghana’s main opposition party ahead of a December general election, the sources said.</p>



<p>“It’s genuinely 50-50 at the moment, but if the local politics works out, the deal is ready to go this year,” said one of the sources.</p>



<p>Ghana’s finance ministry was not immediately reachable due to a public holiday. JP Morgan declined to comment while Bank of America did not immediately respond to a request for comment.</p>



<p>If it goes ahead, the listing would benefit from a surge in gold prices as the COVID-19 pandemic pushed investors into safe-haven investments.</p>



<p></p>



<p>While the spot gold price has come off a record high hit in August, it is still up a whopping 27% so far this year at $1,931 an ounce&nbsp;<a href="https://www.reuters.com/quote/XAUUSD">XAU=</a>.</p>



<p>Canadian companies Yamana Gold and Wheaton Precious Metals have both signalled their intention to add a London listing this year.</p>



<p>For London investors, it is an opportunity to increase gold exposure and potentially fill the gap left by South Africa’s Randgold, which delisted in 2018.</p>



<p>The deal would also come at a time when the market for IPOs has come roaring back after a dismal first half of the year, with The Hut Group&nbsp;<a href="https://www.reuters.com/companies/THG.L">THG.L</a>&nbsp;sealing a 5.4 billion pound ($6.99 billion) float last week.</p>


gold-is-money-2430051_1280

Ghana plans $500 million London listing of gold royalty fund: sources

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<p>Ghana and Cote d&#8217;Ivoire plan to raise the price farmers get paid for cocoa by about 21 per cent. Both countries account for over 60 per cent of the global production of the cocoa bean. Chike Nwagwu, CEO of Novus Agro, joins CNBC Africa’s Esther Awoniyi for more.</p>


Ghana

Ghana, Cote d’Ivoire plan 21% hike on farm gate cocoa prices

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<p>Mozambique’s headline inflation remained unchanged at 2.8 per cent year on year in August and S&#038;P Global Ratings downgraded Ghana’s long-term foreign and local currency sovereign ratings from B to B- as  the COVID-19 pandemic will exacerbate the country’s fiscal challenges, with government debt increasing to over 70 per cent of GDP in 2020. Ridle Markus, Africa Strategist, Absa Corporate and Investment Banking joins CNBC Africa for more.</p>


S&P downgrades Ghana’s foreign & local currency to B-


<p>ACCRA (Reuters) &#8211; Ghana will reopen air borders to international travel as of Sept. 1 after closing them in March to limit the spread of the coronavirus, President Nana Akufo-Addo said in a speech to the nation on Sunday.</p>



<p>Land and sea borders will remain closed, he said.</p>


640px-Flag_of_Ghana.svg

Ghana to reopen international air borders from Sept. 1, says president

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<p>Ghana launched and handed over the Secretariat of the African Continental Free Trade Area to the African Union at a time when the Ghana Union of Traders Association has asked Nigerians in retail trading to close shops in Ghana. Obiora Madu, CEO of Multimix Group joins CNBC Africa to discuss ways to address Africa&#8217;s regional integration challenges.</p>


How to address regional integration challenges in West Africa

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<p>The Nigerian government says it will take urgent steps to address the closure of retail businesses owned by its citizens residing in Ghana.</p>


How will Nigeria address closure of Nigerian retail businesses in Ghana?

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<p>Traders say most banks in Ghana are attractively valued as most are trading below their book values and provides a good entry point for investors.</p>


Databank Group: Where to find investment opportunities in Ghana’s banking sector


<p>ACCRA (Reuters) &#8211; Ghana expects cocoa output of around 900,000 tonnes in the 2020/2021 season, up 5.8% from the forecast for 2019/2020, the country’s Cocoa Board (COCOBOD) said, according to a parliamentary report published on Wednesday.</p>



<p>Ghana is the world’s second-biggest cocoa producer. Its growing season runs from October to September.</p>



<p>The report also said the COCOBOD planned to raise $1.3 billion in syndicated loans to fund cocoa purchases during 2020/21 from a consortium of banks and financial institutions, with the government as guarantor.</p>



<p>The loan will carry annual interest of one month Libor plus 1.75%, a commitment fee of 0.62% per year and an upfront flat fee of 1.25%.</p>


cocoa

Ghana expects 5.8% increase in cocoa output in 2020/2021

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<p>Ghana&#8217;s total public debt stock rose to 67 per cent of GDP as at the end of June this year compared with 62.4 per cent of GDP as at the end of December 2019.</p>


COVID-19: How Ghana plans to fund its widening budget deficit


<p>ACCRA (Reuters) &#8211; Ghana’s central bank on Monday maintained its policy rate at 14.5%, citing a need for macro-economic stability despite the slowdown brought on by the coronavirus pandemic.</p>



<p>Ghana’s economy, which relies heavily on natural resources like cocoa, gold and oil, is expected to grow in 2020 at its slowest rate in nearly 40 years, leading the government last week to announce a $17.4 billion support programme. [nL5N2EU61X]</p>



<p>Bank of Ghana Governor Ernest Addison described mixed economic indicators during a monthly news conference. He noted a gradual rebound in credit growth and “reassuring results” from stress tests conducted on banks this month.</p>



<p>However, he said the budget deficit for the first half of 2020 stood at 6.3% compared with the 3% target and expressed concern about rising inflation.</p>


currency-note-paper-money

Ghana central bank keeps benchmark policy rate steady at 14.5%

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<p>West African leaders have begun a virtual extraordinary summit to negotiate an end to the deepening political crisis in Mali. This comes after presidents from Nigeria, Ivory Coast, Senegal, Ghana and Niger held talks on Thursday last week that ended in a stalemate. Onyekachi Adekoya, Managing Director of PR24 Nigeria joins CNBC Africa for more.</p>


ECOWAS holds extraordinary summit on Mali’s political crisis

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<p>Ahead of Ghana’s MPC rate decision today, the Bank of Ghana’s economic activity indicator has shown a fall of 10.6 per cent in May, whilst consumer and business confidence levels have rebounded amid their sharp declines in April. Ridle Markus, Africa Strategist, Absa Corporate and Investment Banking joins CNBC Africa for more.</p>


COVID-19: Ghana records 10.6% y/y decline in economic activity in May

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<p>A one-day summit by West African leaders from Nigeria, Ghana, Cote d’Ivoire, Senegal and the Niger Republic ended in a stalemate after the leaders met with Mali’s President Ibrahim Boubacar Keita and Muslim Cleric Mahmoud Dicko and other opposition leaders to negotiate an end to the political crisis in the country. Protesters took to the street on the 5th of June demanding a better economy, an end to corruption, a stronger fight against jihadist groups and irregularities in the local election results. Dennis Amachree, CEO of Zoomlens Security Solutions joins CNBC Africa for more.</p>


Ghana

Ghana Elections: John Gatsi on the effect of elections on Ghana’s economy

2020 elections: Assessing the state of Ghana’s democratic institutions

Fitch: Ghanaian economy to grow at 4.8% in next fiscal

Analysis – why Ghana is no longer the poster child for African economic reform

Ghana plans $500 million London listing of gold royalty fund: sources

Ghana, Cote d’Ivoire plan 21% hike on farm gate cocoa prices

S&P downgrades Ghana’s foreign & local currency to B-

Ghana to reopen international air borders from Sept. 1, says president

How to address regional integration challenges in West Africa

How will Nigeria address closure of Nigerian retail businesses in Ghana?

Databank Group: Where to find investment opportunities in Ghana’s banking sector

Ghana expects 5.8% increase in cocoa output in 2020/2021

COVID-19: How Ghana plans to fund its widening budget deficit

Ghana central bank keeps benchmark policy rate steady at 14.5%

ECOWAS holds extraordinary summit on Mali’s political crisis

COVID-19: Ghana records 10.6% y/y decline in economic activity in May

Mali political crisis: No deal reached after five ECOWAS leaders intervene

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Ghana

Ghana Elections: John Gatsi on the effect of elections on Ghana’s economy

2020 elections: Assessing the state of Ghana’s democratic institutions

Fitch: Ghanaian economy to grow at 4.8% in next fiscal

Analysis – why Ghana is no longer the poster child for African economic reform

Ghana plans $500 million London listing of gold royalty fund: sources

Ghana, Cote d’Ivoire plan 21% hike on farm gate cocoa prices

S&P downgrades Ghana’s foreign & local currency to B-

Ghana to reopen international air borders from Sept. 1, says president

How to address regional integration challenges in West Africa

How will Nigeria address closure of Nigerian retail businesses in Ghana?

Databank Group: Where to find investment opportunities in Ghana’s banking sector

Ghana expects 5.8% increase in cocoa output in 2020/2021

COVID-19: How Ghana plans to fund its widening budget deficit

Ghana central bank keeps benchmark policy rate steady at 14.5%

ECOWAS holds extraordinary summit on Mali’s political crisis

COVID-19: Ghana records 10.6% y/y decline in economic activity in May

Mali political crisis: No deal reached after five ECOWAS leaders intervene

News Tips

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