Dr. Yao Eli Sebastian Nafrah writes: From Lower-Middle Income to Junk Status: Analyzing Ghana’s Economic Decline under Nana Akufo-Addo and its Electoral Implications

Introduction

Moving from a lower-middle-income economy to a “junk” credit rating, Ghana’s economic woes have been marked by rising debt, inflation, and a collapsing currency.

This economic downturn has raised significant questions about governance, fiscal discipline, and economic management. Could this explain the massive electoral backlash against the NPP in the December 7 elections and the return of former President John Dramani Mahama?

This article explores the factors behind Ghana’s economic collapse and its political consequences.

The Economic Decline: Key Factors

• Excessive Borrowing and Unsustainable Debt Under Nana Akufo-Addo’s administration, Ghana’s public debt skyrocketed. According to the Bank of Ghana, the debt-to-GDP ratio surged from 56% in 2016 to over 90% by 2023. Heavy borrowing, both domestically and externally, without corresponding investments in productive sectors led to unsustainable debt levels. Much of the borrowed funds were channeled into consumption and flagship projects like Free Senior High School (Free SHS), which, while popular, lacked a sustainable funding model.

• Fiscal Mismanagement and Corruption Fiscal discipline eroded as government spending outpaced revenue generation. The Auditor General’s reports highlighted rampant mismanagement and corruption in state institutions, with public funds often misappropriated or wasted. The lack of transparency and accountability exacerbated the fiscal crisis, undermining investor confidence.

• Collapse of the Cedi and Inflation The Ghanaian cedi depreciated sharply against major currencies, losing over 60% of its value in 2022 alone. This decline was driven by a combination of excessive borrowing, a weak export base, and dwindling foreign reserves. Inflation soared to unprecedented levels, reaching over 50% at its peak, eroding the purchasing power of ordinary Ghanaians and deepening poverty.

• Dependency on IMF Bailouts Ghana’s economic struggles culminated in the country seeking yet another bailout from the International Monetary Fund (IMF) in 2023, the 17th in its history. The IMF program, imposed austerity measures, including tax hikes and cuts in public spending, which further burdened citizens. The reliance on external financial institutions highlighted the government’s inability to manage its economy independently.

• Neglect of Productive Sectors While the government touted initiatives like “One District, One Factory” and “Planting for Food and Jobs,” these programs failed to deliver tangible results. Agriculture, manufacturing, and industrialization stagnated, leaving the economy heavily reliant on imports and commodity exports like gold and cocoa. This lack of diversification made Ghana vulnerable to external shocks.

Impact on the Ordinary

The economic decline under Nana Akufo-Addo had severe consequences for ordinary citizens. Unemployment soared, particularly among the youth, while the cost of living reached unbearable levels. Rising fuel prices, utility tariffs, and food costs pushed many into poverty, creating widespread discontent. Public sector workers faced delays in salary payments, and businesses struggled to survive amidst high taxes and currency depreciation.

The December 7 Election: A Referendum on Economic Mismanagement The December 7 election served as a referendum on the Akufo-Addo administration’s economic stewardship. The massive vote against the NPP reflected deep frustration with the government’s failure to deliver economic prosperity. Citizens, particularly the youth and middle class, felt betrayed by unfulfilled promises and worsening living standards.

John Dramani Mahama’s return to power can be attributed to his campaign’s focus on economic recovery, job creation, and social intervention programs. Mahama positioned himself as a leader with the experience to navigate Ghana out of its economic crisis, contrasting his tenure’s lower debt levels and more stable economic indicators with the current turmoil.

What Went Wrong? Lessons for the Future

The economic collapse under Nana Akufo-Addo offers critical lessons for Ghana’s future leadership:

• Fiscal Discipline: Governments must prioritize responsible borrowing and spending, ensuring that debt is used for productive investments rather than consumption.
• Transparency and Accountability: Combating corruption and ensuring efficient use of public funds are essential for restoring investor confidence and economic stability.
• Diversification of the Economy: Ghana must reduce its reliance on commodity exports and focus on industrialization, agriculture, and technology-driven sectors to build resilience.
• Sustainable Social Programs: Flagship initiatives like Free SHS must be supported by sustainable funding mechanisms to avoid straining public finances.

Before concluding this article, which examines the socio-economic factors that have contributed to the current economic stagnation, I conducted interviews with individuals from the streets. The following is a summary of their insights.

Why Akufo-Addo’s Party Lost the December 7 Polls: A Street Analyst’s Perspective

In the aftermath of the December 7 elections, the political landscape in Ghana has shifted significantly, with John Dramani Mahama and the National Democratic Congress (NDC) emerging victorious. While political pundits, academics, and party loyalists dissect the results in boardrooms and media studios, the streets tell a different, raw, and unfiltered story. As a street analyst, I aim to highlight the factors that culminated in the defeat of Akufo-Addo’s New Patriotic Party (NPP) and the resurgence of Mahama’s NDC.

• Economic Hardship: A Silent Killer of Votes: The NPP government under President Akufo-Addo and Vice President Dr. Mahamudu Bawumia promised to transform Ghana’s economy through industrialization, job creation, and digitalization. However, the reality on the ground was far different. The streets were hit hard by skyrocketing inflation, a depreciating cedi, and a high cost of living that made basic necessities unaffordable for many Ghanaians.

The youth, who had once bought into the NPP’s rhetoric of job creation through initiatives like NABCO and the 1D1F policy, felt betrayed. NABCO graduates were left stranded after the program ended without sustainable employment, and factories promised under 1D1F remained incomplete or inactive. For many voters, the economy became a breaking point, and they saw in John Mahama a chance to reset.

• The “Digital Man” Perception Backfired:  Dr. Bawumia, touted as the “digital man,” led the NPP’s charge for digital transformation, including mobile money interoperability, the Ghana Card rollout, and the digitalization of government services. While these achievements were praised by technocrats, the average Ghanaian on the street saw no direct impact on their pockets. The digital economy narrative, though innovative, failed to resonate with the informal sector, which forms the backbone of Ghana’s economy. Market women, taxi drivers, and small business owners prioritized economic relief over digital systems they struggled to engage with. Mahama’s promise to prioritize economic relief over abstract digitalization earned him favor.

• Corruption and the “We Are Tired” Sentiment: Corruption allegations plagued Akufo-Addo’s administration, eroding public trust in his government. High-profile scandals such as the PDS deal, the controversial Agyapa Royalties agreement, and perceived nepotism in government appointments gave the NDC ammunition to attack the NPP’s credibility. Street-level conversations revealed a growing sentiment of “we are tired” among Ghanaians. Many believed that the NPP had abandoned its promise to fight corruption, instead entrenching the very practices they once condemned. Mahama, despite his past criticisms, was viewed as the lesser evil by voters desperate for change.
• The Youth Factor and the Power of social media: The 2024 elections saw an unprecedented level of youth engagement, driven largely by social media platforms. Unlike previous elections where mainstream media dominated, this time, the youth used platforms like Twitter, TikTok, and Facebook to amplify their frustrations with the government. The NDC capitalized on this digital momentum, portraying Mahama as a leader who understood the struggles of the youth. The NPP, on the other hand, underestimated the power of social media activism, dismissing it as mere noise. The “FixTheCountry” movement, youth-led protests, and viral campaigns became powerful tools that worked against the incumbent party.

• John Mahama’s Strategic Messaging: John Mahama’s campaign strategy was simple yet effective: acknowledge past mistakes, focus on bread-and-butter issues, and promise a new vision for Ghana. Unlike the NPP’s defensive stance, Mahama’s humility and willingness to reconnect with the grassroots earned him significant goodwill. The NDC’s messaging focused on themes such as ‘24 hour economy’ operationalization, jobs, infrastructure, and economic relief, resonating deeply with voters who felt abandoned by the NPP’s elite-focused policies. Mahama’s ability to position himself as a “man of the people”, especially in rural and peri-urban areas, paid off handsomely.

• The Role of the Electoral Commission and Perception of Bias: The conduct of the Electoral Commission (EC) under Akufo-Addo’s administration faced scrutiny, with opposition parties and civil society questioning its neutrality. Though the EC largely operated within its mandate, the perception of bias created distrust among voters.

For many Ghanaians, this distrust fueled a determination to vote in large numbers to “protect the ballot”. The NDC’s vigilant poll watchers and mobilization strategies ensured that votes were not only cast but also protected, minimizing any doubts about the election’s outcome.

• Broken Promises in Northern Ghana and the Kayayei Crisis: The NPP’s failure to address long-standing issues in Northern Ghana, particularly the plight of head porters (kayayei), cost them dearly. Vice President Bawumia, a native of the North, was expected to champion solutions for the region’s developmental challenges. However, the government’s response was largely seen as superficial, with temporary shelters for kayayei offering little hope for their future.

The NDC seized this opportunity, promising sustainable development and empowerment for marginalized communities. Mahama’s roots in the North further solidified his appeal in these regions, delivering a crucial bloc of votes.

• The Akufo-Addo Fatigue: After eight years of Akufo-Addo’s leadership, a sense of fatigue set in among voters. The NPP’s inability to reinvent its message and leadership made it difficult to inspire confidence in their ability to deliver a fresh start. Mahama’s return offered a familiar yet renewed alternative, which h many voters found more appealing.

Conclusion: A Lesson in Listening to the Streets

The NPP’s defeat in the December 7 polls was not the result of a single factor but rather a combination of economic hardship, corruption perceptions, strategic missteps, and Mahama’s ability to reconnect with the grassroots.

The streets spoke loudly and clearly, rejecting a government they felt had lost touch with their struggles. For John Mahama and the NDC, this victory serves as both a mandate and a challenge. The expectations are high, and the same streets that voted for change will hold them accountable.

The lesson for all political parties is simple: ignore the voice of the people at your peril. As an analyst, one thing is clear – elections are won not in air-conditioned offices but on the streets, where the real pulse of the nation beats.

Ghana’s journey from a lower-middle-income country to junk status under Nana Akufo-Addo reflects the consequences of fiscal mismanagement, excessive borrowing, and poor economic planning. The December 7 election results highlight the electorate’s demand for change and economic recovery. John Dramani Mahama’s return signals a new opportunity to address these challenges and restore Ghana’s economic dignity.

Moving forward, prudent leadership, accountability, and strategic economic policies will be crucial in reversing the damage and putting Ghana back on a path of sustainable growth and prosperity.