Ghana’s Mahama Touts $10 Billion Plan in Race for Presidency
(Bloomberg) -- Former Ghanaian President John Mahama said he’ll spend $10 billion on infrastructure over the next five years if he defeats the incumbent in elections next week.
Mahama plans to build roads, dams and schools, and extend an airport and hospital, should he defeat President Nana Akufo-Addo in the Dec. 7 vote, he said in an interview Wednesday. The West African nation is the world’s second-biggest producer of cocoa after Ivory Coast, and Mahama will work to ensure half its output is processed domestically, compared with 38% now.
“We’ll be able to take care of social and economic infrastructure without necessarily escalating debt,” Mahama, 62, said in an interview Wednesday. A fund will be created using proceeds from oil, value-added tax and annual budget funding, and many of the projects will pay for themselves over time, said the candidate who led Ghana from 2012 to 2017.
Ghana is heading into a tight election amid debt woes that began before the coronavirus struck. By March, Akufo-Addo’s administration had already spent almost 23 billion cedis ($4 billion) on a financial-industry cleanup since 2017, while also starting to address energy sector liabilities of more than 10 billion cedis. Its response to the pandemic has compounded its indebtedness: Ghana’s debt-to-gross domestic product ratio ballooned to 71% by Sept. 30, with more than 3 billion cedis allocated to tackling the health crisis that hadn’t been budgeted for.
The ruling New Patriotic Party and Mahama’s National Democratic Congress have dominated politics since 1992, and previous ballots have been close-run races. Opinion polls show the two contenders running neck-and-neck before Monday’s election.
If elected, Mahama intends engaging with Ghana’s creditors to “reprofile” the nation’s debt, including the money owed to power producers, which he sees as the “Achilles heel of the economy.”
Ghana is charged over $500 million a year for electricity it doesn’t use, an energy ministry spokesman said in emailed comments Thursday. “Most of the (contracts) are legacy agreements, entered into under the Mahama administration in an uncoordinated and hasty attempt to end dumsor,” he said referring to the local term for power cuts.
Mahama hasn’t ruled out approaching the International Monetary Fund for credit -- as Ghana did in 2015 -- or tapping international markets.
“I hope that it won’t be necessary to go back to the IMF, but I won’t rule it out,” Mahama said. “All cards are on the table.”
Akufo-Addo, 76, had a solid economic record prior to the advent of the coronavirus. In a country where gold and cocoa production have dominated exports for decades, output from new oil fields pushed economic growth to more than 6% over each of the past three years. Inflation slowed to less than 10% for the first time in six years in April 2018, and remained below that level until April this year. The cedi has had its most stable spell in more than a decade.
The opposition leader claimed credit for his successor’s accomplishments, saying his administration laid the groundwork by taking tough decisions under the IMF program and ensuring the development of two new oil fields.
“Those revenues came, landed in the lap of this government,” Mahama said. Akufo-Addo “squandered” what he inherited, and the economy “could have been more resilient” after being confronted by the pandemic, he said.
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