Ghana's Supreme Court Election Verdict and Investor Confidence

Published August 29, 2013
 




Ghana’s Supreme Court this afternoon by a majority decision affirmed the December 2012 election of the country’s president, John Mahama. The presiding judge of the nine member panel said that “the first respondent (president Mahama) was validly elected”.

President Mahama, 54, of the National Democratic Congress, won 50.7 per cent of December’s vote, according to the Electoral Commission of Ghana, against 47.7 per cent for Mr Akufo-Addo – a difference of 325,863 ballots.

The opposition New Patriotic Party (NPP) led by its flagbearer Nana Akuffo-Addo had petitioned the country’s highest court to invalidate the win of John Mahama, claiming widespread irregularities. The party presented strong evidence from about 10,000 polling stations across the country to back its claim.

The petition which took over 7 months to be decided was for the first time broadcast live on television and radio, giving Ghanaians access to the proceedings in the court room. The petition hearing even took a professional twist when auditors, KPMG, were tasked to count and tally some ballot result sheets that were tendered in evidence by the petitioners.

This has been hailed as a rare feat in Africa, a region with many conflicts arising out of electoral disputes. Ghana’s neigbhour Ivory Coast experienced war when it went to the polls in 2011. In the end 3,000 people die with many injured.

Thus the peaceful and mature way Ghana has handled its electoral dispute in court and its subsequent verdict will be admired by many countries in Africa.

The country’s courts are noted for their independence, thus making it impossible to predict what the eventual outcome was to be. In the over seven month’s that the case has been ongoing, it has been reported that major investor decisions have been delayed-pending the outcome of the electoral petition.

Ghana, which is expected to grow at 7.8% this year, according to the IMF, has been affected by the long drawn court case. The Ghana Stock Exchange is up 65 per cent in 2013, but analysts say investors have delayed making decisions about projects.

“At the beginning of the year investors were carrying on as normal,” “but when people saw that a solid case was being presented, they put the brakes on,” said Kissy Agyeman-Togobo, partner at Songhai Advisory, a West African business intelligence consultancy in an interview with the Financial Times.

In May this year, when the election petition had gained momentum, Ghana’s central bank governor, Dr Kofi Wampah revealed that the economy had slowed down heightened by fears of a growth in inflation.

Indeed inflation which stood at 9% before elections in December last year, has risen to 11.8% by July 2013.

Wampah said the bank’s Composite Index of Economic Activity (CIEA), which measures the pace of economic activity, had declined by 0.6 percent in May after a 14.8 percent growth in March. The period also saw all the components of the CIEA recording negative yearly growth rates with the exception of tourist arrivals, domestic VAT and DMBs’ credit to the private sector.

“The pace of growth in credit to the private sector has also moderated, while the credit stance of banks has tightened,” Wampah said in his the monthly monetary policy report presented in May.

The Business Confidence Index declined to 99.0 in March 2013, from 104.1 in December 2012. Wampah attributed this partly to the energy crisis, which he said had lowered business confidence. “Similarly, the Consumer Confidence Index also fell to 96.1 in April, from 105.0 in January 2013,” he added.

However, the energy crisis has stabilized with regular supply of electricity, with businesses and the manufacturing sector heaving a sigh of relief. Ghana’s 400MW Bui Hydro dam which is under construction by Chinese, is expected to be ready by December, further increasing the electricity supply.

With the electoral petition out of the way, investor confidence is expected to return. Ghana went to the international markets last month to float a $1million Eurobond which was over-subscribed by $1.2 billion. The bond has been listed on the Irish Stock Exchange.

A similar local bond floatation last week was heavily oversubscribed by 17%, a further demonstration that confidence in the economy is still there.

Ghana, Africa’s second biggest producer of gold also saw decreased revenues in the first half of this year, due to the falling price of gold. However gold prices have slowly began climbing up. With an expected increase in oil production from the country’s Jubilee field together with the introduction of new taxes, the economy is expected to rally strongly by year end.

The government has hinted of possibly going to the international market to seek another bond by year end, to fund critical infrastructure projects.

This week, Mazars Limited, the world’s ninth biggest auditing firm, launched operations in the country. Many such companies, who had been waiting for the election petition outcome, are likely to follow suit.