Resetting Ghana: Can Mahama's bold Economic Plan Revive the Economy?

With less than 24-hours to Ghana's crucial election, the main opposition National Democratic Congress' (NDC) proposed policies and programmes have gained significant traction. So much so, infact, that the emphasis by the electorate has shifted from seeking out the policies to demanding detailed accompanying implementation plans and funding arrangements. 

These are fair requests. The Ghanaian economy is in tatters after all – an unprecedented debt to GDP ratio, debt distress, high inflation, a stringent IMF programme, high unemployment rate, lack of access to international capital markets, unprecedented depreciation of the Cedi, looming indebtedness to the independent power providers and to international creditors.

Even so, amidst the crisis, the self-touting economic messiahs who took over the reins of the Ghanaian economy in 2017, with loud proclamations of their prowess, still refuse to eat humble pie. So, how will a President Mahama-led government approach this important question of funding the impressive initiatives outlined in the NDC manifesto?

We share our perspectives below.

Short Term Approaches

The first step is to rebuild credibility and confidence again in the leadership and in the country locally and internationally. Ghana’s current limited funding options including being locked out of the international capital markets simply reflect the status quo of economic mismanagement.

The NDC’s plans to immediately establish the true state of the economy, leverage inputs from a forum of key stakeholders and prepare a homegrown fiscal consolidation programme to guide the budget will send clear signals of the determination of the Mahama government to enforce greater fiscal discipline, especially in the first year. President Mahama’s plan, which includes running the leanest government in the fourth republic, will cut the waste, plug leakages and provide fiscal space to invest in his progressive agenda.

Further, the signals from the investor community during President Mahama’s recent engagements on his foreign direct investment policies are clear. These signals all attest to greater confidence in the NDC’s leadership, policies and programmes, relative to the NPP’s exertions over the past eight years which have simply run the Ghanaian economy aground.  This investor confidence will be key in 2025. In fact, if there was anyone looking for a reason to vote for the NDC, this is more than enough reason – the investor community has more confidence in an NDC government than an NPP administration going into this election.

This regained confidence will also be crucial when the current IMF programme ends in the second quarter of 2026 and local and international creditors come calling. The Mahama government should consider refinancing these loans, thereby creating the needed fiscal space to fund his highly prioritized progressive policies and programmes.

Beyond the homegrown fiscal consolidation programme in the first year, other short term funding options should be explored. Among these is the NDC’s policy on Islamic Finance where the government plans to pursue membership of the Islamic Development Bank to broaden opportunities for development financing.

Additionally, the NDC needs to pull in philanthropic capital by setting up a desk dedicated to sourcing non-traditional capital. Traditionally, all of Ghana’s public sector fund raising is focused on bilateral partners (rich governments) and multilaterals (World Bank, IMF and a few DFIs). However, there are thousands of philanthropic foundations in the world supporting governments and the private sector. We have not to date developed the capabilities required to tap into this bucket. The special desk for sourcing non-traditional capital should be resourced with that capacity to make Ghana more effective at diversifying our fundraising beyond bilaterals and multilaterals.

With respect to our traditional funding sources, there are a number of International Development Association financing (IDAs) facilities that we can renegotiate with, with the view to increasing the funding and impact. One such IDA programme is the USD 200million Ghana Skills and Jobs Programme which needs to be redesigned to improve efficiency and scale impact under the Jobs for All programme. Other specific funding strategies include leveraging Public Private Partnerships (PPP) arrangements by streamlining the PPP process and making the PPP law more investor friendly. A great step being considered to create more fiscal space is Debt- for Nature-Swaps which allows the government to negotiate debt forgiveness with creditors in exchange for commitments to invest in environmental and sustainable infrastructure projects.  Debt forgiveness provides additional fiscal space.

The NDC’s plans to extensively tap into the Ghanaian diaspora through Diaspora Bonds, thus reducing reliance on external debt, are commendable. This initiative will offer Ghanaians abroad a direct way to invest in Ghana and support key infrastructure projects.

Funds already exist globally that target investments in projects based on clearly defined Environment, Society, Governance (ESG) criteria. These should not be spared by the Mahama government. The NDC should indeed implement a Green and Blue Bond Framework with project eligibility and impact reporting guidelines to encourage such funds to invest in the bonds and fund specific projects. A good example is the Africa Go Green Fund of KFW.

Results Based Financing (RBF) is another available option where the NDC government can demonstrate transparency and attract transparency focused funding that ties funding to specific benchmarks. These are all short-term financing strategies that the NDC can and should adopt to finance the short-term development policy priorities.

Medium Term Approaches

The NDC’s plans to rationalize the tax regime to relieve overtaxed sections of the economy while ensuring that under taxed sections carry their fair share of the responsibility, are commendable. A good example is the tax exemptions given to companies in the free zones enclave. Many of these companies, when the exemptions elapse, just re-register under different names and continue to enjoy the freebies. Similarly, capital allowances given to mining companies will all be reviewed with a view to plugging loopholes, creating fairer taxes, fostering the growth of companies and increasing government revenues.

In health specifically, NDC plans to uncap the National Health Insurance levy, ensuring a hundred percent availability of funds, establish the Ghana Medical Care Trust Fund to support the cost of care for persons with chronic diseases, and legislate for and assign a percentage of revenue from established and new extractive fields to the national health insurance fund. Similarly, a percentage of the National Insurance Commission motor insurance premium will be assigned to the national health insurance fund to cater for road traffic accident victims and for accident vehicle recovery.

Conclusion

In summary, the incoming Mahama government is not unmindful of the grave economic situation of the country. Infact the NDC government knows Ghanaians are yet to come to full grips with the actual depth of economic decay. This notwithstanding, with prudent economic management, innovative funding strategies, the leanest most efficient government in the history of Ghana’s fourth republic, and the support of the good people of this country, Ghana will be reset. And rise again!

Source:  Abdul-Nasser Alidu & Sodzi Sodzi-Tettey (Dr) /Lead News Online

Abdul-Nasser Alidu, is a Strategy & Marketing Executive and Member of the Employment and Job Creation Committee of the NDC and Sodzi Sodzi-Tettey (Dr), is a Global Health Practitioner, Member of the Health, & Gender, Children and Social Protection Committees of the NDC & Chairs the Volta Youth Working Committee of the NDC.