In December 2024, Ghana’s political and governance structure experienced an enthralling moment as citizens turned out in droves to cast their votes in a hotly contested presidential election. In the end, the nation elected John Dramani Mahama, signaling a return to leadership for a seasoned politician and former President. John Mahama’s victory reflects the people’s hope for experienced governance to steer Ghana through its current economic challenges, which have left many grappling with high inflation, a depreciating currency (cedi), and significant fiscal deficits.
For many Ghanaians, this election represented more than a routine democratic process; it was a referendum on economic management and a call for urgent solutions to their plight. The preceding years under the outgoing President Nana Addo were marked by economic instability, with external shocks and domestic policy missteps exacerbating the country’s financial struggles. John Mahama’s campaign capitalized on these concerns, promising to leverage his governance experience to stabilize the economy, restore investor confidence, and alleviate the hardships faced by ordinary citizens.
As John Mahama takes office, his administration inherits an economy at a critical crossroads. The challenges ahead include tackling unsustainable public debt, addressing youth unemployment, and revitalizing key sectors such as agriculture and manufacturing. Expectations are high for decisive action to restore macroeconomic stability, create jobs, and rebuild Ghana’s economic resilience. Stakeholders, including businesses and international partners, are keenly observing the early days, hoping for clear signals of a commitment to reforms and sustainable growth strategies.
Whether through fiscal discipline, industrialization efforts, or leveraging digital transformation, Mahama’s government has the chance to turn Ghana’s fortunes around and restore faith in its economic future.
The Current State of Ghana’s Economy
In recent years, Ghana has faced several economic hurdles that have tested its resilience. Inflation, a growing fiscal deficit, an unsustainable debt burden, and a sluggish growth rate have been central to the nation’s economic struggles. In 2023, Ghana’s inflation rate reached 54.1%, the highest in more than two decades, and although it slightly declined in 2024, it remained at elevated levels. The Ghanaian cedi has also experienced sharp depreciation, making imports more expensive and increasing the cost of living for ordinary citizens.
The Ghanaian cedi depreciated by 18% against the US dollar in 2024, driven by a lower current account surplus due to increased import demand, a sharp decline in cocoa exports and energy sector payments, in addition to speculative activity and delays in external debt restructuring. As of September 2024, the cedi was noted to have depreciated by 24.3% against the dollar in the preceding year. Since end-2021, the cedi has depreciated by 59% against the dollar. This depreciation has been attributed to a decline in foreign direct investment and other economic factors.
In addition, Ghana’s debt-to-GDP ratio has surged, leaving the country in need of significant debt restructuring. Ghana recorded a Government Debt to GDP of 84.90 percent of the country’s Gross Domestic Product in 2023. Government Debt to GDP in Ghana averaged 47.82 percent of GDP from 1990 until 2023, reaching an all-time high of 92.40 percent of GDP in 2022 and a record low of 18.50 percent of GDP in 2006.
The situation of the public finances was unsustainable, with nearly half of the budgetary resources in 2022 dedicated solely to interest payments. The present value (PV) of Public and publicly guaranteed (PPG) debt to GDP ratio as of November 2022 stood at 100.34%. The government has set a PV of PPG debt to GDP ratio of 55% by the end of 2028 to achieve debt sustainability.
Ghana formally announced its debt restructuring program at the start of December 2022 as a prerequisite to access IMF funding, required of any country whose debt is deemed unsustainable. Eventually, the IMF bailout of $3 billion, which was signed to stabilize the economy, has brought some relief but also placed constraints on fiscal policy, particularly in terms of public sector spending. These conditions, coupled with supply-side issues in the energy sector and low investor confidence, have hindered the growth of key industries such as agriculture and manufacturing, making it imperative for Mahama’s new government to take swift and decisive action.
A Shift in Economic Leadership
As Ghana transitions to the leadership of John Dramani Mahama, the country stands at a crossroads. John Mahama, who previously served as President from 2012 to 2016, is no stranger to Ghana’s economic challenges. During his first tenure, he faced similar fiscal pressures, but his administration was able to manage significant infrastructural projects and maintain a focus on poverty reduction. Now, in 2024, with the benefit of hindsight and greater understanding of the country’s current economic dynamics, Mahama has outlined a range of policies designed to address the fundamental weaknesses of the economy.
The core of Mahama’s economic strategy revolves around restoring macroeconomic stability, fostering inclusive growth, and creating a sustainable economic environment for future generations. His government should be focused on tackling inflation, reducing Ghana’s debt burden, and reforming key sectors such as agriculture, energy, and industry, which are critical for long-term economic growth.
Key Policy Pillars for Reviving the Economy
Under John Mahama’s leadership, Ghana is expected to see several bold moves aimed at stabilizing the economy. One of the primary areas of focus must be fiscal reform. The Mahama administration has signaled its intent to renegotiate the terms of Ghana’s ongoing agreement with the International Monetary Fund (IMF). While the IMF deal has provided some temporary relief, Mahama’s team believes the current arrangement places too much emphasis on austerity measures that slow down domestic economic growth. The goal is to find a balanced approach that allows for both fiscal consolidation and the necessary investments to boost productivity and employment.
In particular, Mahama’s government aims to reduce the nation’s debt-to-GDP ratio by accelerating the debt restructuring process. With Ghana’s external debt standing at approximately $35 billion as of 2023, the restructuring process is expected to free up fiscal space that can be directed towards critical sectors such as education, healthcare, and infrastructure development. This would help alleviate the strain on government resources, allowing the administration to focus on more sustainable long-term policies rather than short-term fixes.
Furthermore, John Mahama’s policies aims to address the growing challenge of inflation. To curb inflation, his administration must focus on increasing food production and promote agricultural exports, which will help stabilize prices and reduce reliance on imports. Improving productivity in the agriculture sector, which remains the backbone of Ghana’s economy, should be a key part of Mahama’s plan to reduce the pressure on food prices and support rural livelihoods.
Reforming Agriculture, A Gateway to Economic Growth
One of the central pillars of Mahama’s economic policy is the revitalization of the agricultural sector. Agriculture is the largest sector of the Ghanaian economy, employing over 50% of the workforce. However, despite its importance, agriculture has struggled with stagnation in recent years. Challenges such as aging infrastructure, low mechanization, and the impact of climate change have resulted in declining yields and poor returns for farmers.
Mahama’s government plans to address these issues through targeted interventions aimed at modernizing the agricultural sector. His policy includes investing in irrigation systems, providing farmers with access to affordable inputs, and introducing day-old chicks to farmers and introducing better agricultural practices. Additionally, President John Mahama has promised to restructure the Ghana Cocoa Board (COCOBOD), focusing its role on improving productivity and ensuring fair prices for cocoa farmers. As cocoa remains a key export product for Ghana, increasing its productivity will contribute to improving foreign exchange reserves and support rural communities.
The administration hopes to also place a significant emphasis on agribusinesses by creating a favorable environment for agro-processing industries. This will not only add value to raw agricultural products but also create jobs and stimulate economic activity in the rural areas, which will have a multiplier effect on the broader economy.
Tackling the Energy Crisis
Another critical area of reform for Mahama’s government must be the energy sector. Ghana has been plagued by energy shortages, which have had a profound impact on both households and businesses. Despite significant investments in the power sector in previous years, the Electricity Company of Ghana (ECG) continues to face operational challenges, leading to persistent power outages and inefficiencies.
Mahama’s administration is expected to prioritize reforms to ensure energy security. This includes increasing investments in renewable energy sources such as solar and wind, diversifying the energy mix, and modernizing power distribution networks. By addressing energy sector inefficiencies, the government aims to provide stable power to industries, thus reducing the cost of doing business and fostering growth in manufacturing and other key sectors of the economy.
In addition, Mahama’s government hopes to work to streamline the regulatory framework governing the energy sector, encouraging private investment and ensuring that the distribution of energy is efficient and transparent. This, in turn, will help attract more foreign direct investment, a key component of Mahama’s broader economic growth strategy.
Strengthening Industrialization and Infrastructure
Ghana’s industrialization efforts have been hampered by a lack of infrastructure, poor access to credit for small and medium-sized enterprises (SMEs), and an overreliance on primary commodity exports. Mahama’s government aims to reverse this trend by investing in critical infrastructure projects, including roads, ports, and industrial parks, to enhance connectivity and reduce logistical costs for businesses.
Furthermore, Mahama’s administration hopes to focus on increasing access to credit for SMEs, which have been a vital engine for job creation and economic diversification. By improving access to finance, the government will empower local entrepreneurs and encourage innovation in sectors such as manufacturing, technology, and services.
Small and Medium Enterprises (SMEs), contributing approximately 70% to Ghana’s GDP, are central to economic recovery. Access to credit remains a significant challenge; only 22% of SMEs reportedly received formal financial support in 2023. Mahama’s policies prioritize financial inclusion, enhancing credit accessibility and fostering innovation across manufacturing, technology, and services.
Infrastructure development— including roads, ports, and industrial parks— is another cornerstone of Mahama’s industrialization strategy. Improved connectivity will reduce logistical costs, enabling businesses to thrive and facilitating export growth.
As Mahama assumes office, his government will face the enormous task of restoring confidence in Ghana’s economy and setting the nation on a path toward sustainable growth. While the challenges are significant, the president’s proposed policies provide a roadmap for addressing the underlying issues that have hindered economic progress.
With the right mix of reforms, investment in critical sectors, and a focus on long-term development, Ghana has the potential to emerge from its economic crisis stronger and more buoyant. The journey ahead will be difficult, but the foundation for a more prosperous future is being laid. For the Ghanaian people, Mahama’s economic policies offer hope that the nation’s challenges can be overcome, and its economy can thrive once again.