Author : Bertelsmann Stiftung
Site of the publication : BTI
Type of the publication : Report
Date of the publication : 2024
Political Transformation
Stateness
Ghana’s government has a monopoly over the use of force, and its authority is not in question. The activities of the minor secessionist group, the Western Togoland Restoration Front, which has tried to challenge the state’s authority since 2017, have been curtailed by security forces.
Crime remains a concern, particularly in urban areas; however, the general atmosphere generally conveys a sense of overall security. Law enforcement agencies, including the police, tend to lack public trust. According to the Afrobarometer 2022 survey, the police have a poor reputation. Regardless of this perception, the police have managed to establish a certain degree of law and order in most parts of the country. In rural areas, traditional leaders play a key role in maintaining law and order, as the security forces are less visible there. Inadequate police presence has contributed to a surge in armed and highway robberies within some rural communities in recent years. Border control is porous, resulting in a weak migration regime, yet there are currently no border disputes with neighboring countries.
There are increasing concerns about the jihadist threats from neighboring countries. This is coupled with large-scale interethnic conflicts in several communities and an abundance of small arms, which stretches the limited resources of the security agencies.
Ghana’s state identity is accepted by its population and the international community. Although ethnic nationalism exists in various forms, it does not have a regional or national appeal necessary to fundamentally alter the notion of the Ghanaian nation state. Periodic ethnic conflicts occur, primarily over land use in settings of traditional leadership and chieftaincy. Additionally, there is an increasing tension between nomadic Fulani herders and local farmers. While there is no state-driven discrimination against specific ethnic groups, the politicization of ethnic loyalties remains a troubling and potentially hazardous aspect of Ghanaian politics. Distinctions between political, socioeconomic and ethnic conflicts are not always clearly delineated.
Ghana’s constitution makes a clear distinction between state and religion, although religious beliefs and practices have become part of the state’s identity. Chapter 5 of the 1992 constitution grants citizens fundamental human rights, including religious liberty. Ghanaians are free to believe in and practice any religious faith. Consequently, this has led to a proliferation of churches, with the state facing challenges in regulating them. Additionally, Muslims hold influence in the public discourse, expressing their views and presenting constitutional arguments regarding religious freedom issues, such as the wearing of hijabs in Christian schools.
While the World Bank World Development report of 2022 indicates that 85.9% of citizens have access to electricity, the quality is problematic due to power/load shedding, power fluctuations and high costs. Efforts to improve service delivery and reduce corruption have included a focus on digitalization and e-platforms.
However, these initiatives also face challenges such as a lack of technical competence, insufficient internet connectivity and data, inadequate infrastructure and resources, and insufficient bandwidth.
Political Participation
Ghana is one of the few African countries with a stable democracy and political participation. Universal adult suffrage, the right to campaign and democratic elections are guaranteed and protected by Chapter 7 of the 1992 constitution, both in practice and in law. There have been no significant violations of the principles of free and fair elections in the past 10 elections from 1996 to 2022. However, there are challenges with regard to election administration and management bodies at all levels, and the outcomes are frequently disputed.
While the World Bank World Development report of 2022 indicates that 85.9% of citizens have access to electricity, the quality is problematic due to power/load shedding, power fluctuations and high costs. Efforts to improve service delivery and reduce corruption have included a focus on digitalization and e-platforms
The political structure of Ghana – a unitary state and a presidential system – concentrates significant power within the presidency. The parliament and courts do not hold strong veto power. Officeholders, especially presidential appointees, are subordinate to the president. The elected government enjoys both legitimacy and adequate power to govern, albeit within the limits of a relatively inefficient civil service. The opposition generally accepts the game’s rules, although the main opposition party (depending on which party is in power) often accuses the government of electoral fraud and intimidation.
The 1992 constitution guarantees freedom of expression in Ghana, and these laws are generally respected in the country. However, there have been occasions where specific media houses or journalists have been threatened. In other cases, media houses have been boycotted by both state and opposition representatives for their perceived biases in reporting.
Stability of Democratic Institutions
Democratic institutions in Ghana are fully functional and stable. While the president does have vast powers under the constitution, parliament is not merely a forum for discussion. Most parliamentarians take their duties seriously. The legislature has the authority to scrutinize the activities of the executive branch.
Presidents only have control over their parties – and sometimes not even that, as both major parties are divided into various competing factions. The administration’s shortcomings mainly stem from structural issues such as corruption, education and underfunding rather than undue political interference.
Ghana is one of the few African countries with a stable democracy and political participation. Universal adult suffrage, the right to campaign and democratic elections are guaranteed and protected by Chapter 7 of the 1992 constitution, both in practice and in law. There have been no significant violations of the principles of free and fair elections in the past 10 elections from 1996 to 2022. However, there are challenges with regard to election administration and management bodies at all levels, and the outcomes are frequently disputed
The success of democratic institutions in this country heavily depends on the ability of the two major parties, interest groups and civil society to mobilize political interest and public sentiment.
There is a significant level of commitment to democratic procedures and institutions in this country, albeit to varying degrees. For instance, the fact that there have been three peaceful transitions of power through the ballot box – a rarity in Africa – demonstrates the strong commitment of the political elites to democratic institutions. Additionally, court verdicts on electoral disputes have been widely accepted.
Organization of the Market and Competition
In 2019, Ghana enacted the Companies Act (Act 992), which created the Office of the Registrar of Companies to supervise business registration and regulation. The Office of the Registrar of Companies, tasked with assuming registration responsibilities from the Registrar General’s Department in 2021, operates independently. However, progress in implementing pthe Business Regulatory Reform initiated by the government in 2017 has been lackluster. Market competition suffers due to restricted access to affordable loans and corruption.
For most urban poor and rural dwellers, the unregulated informal sector remains the primary source of income. Taxing the informal sector, therefore, was the government’s objective in passing the Electronic Transfer Levy Act 2022 (Act 1075) and Electronic Transfer Levy (Amendment) Act 2022 (Act 1089). The e-levy imposes a levy of 1% on electronic transfers. The government also aimed to improve tax revenues by tapping into the fast-growing digital financial services sector following reduced revenues due to COVID-19.
Local investors face discrimination, particularly in terms of land use and property ownership, compared to international investors. State-run enterprises, except for a few profitable ones, consume an unequal share of government resources and attention. Private entrepreneurs participate in primary commodity production and trade, with the exception of oil and cocoa, which are subject to significant levels of state control.
Ghana prioritizes foreign direct investment, and the country has experienced a steady increase in foreign direct investment over the years, with totals ranging between $3 billion and $4 billion annually. Foreign companies dominate critical sectors such as trade and banking services, which hinders local entrepreneurship.
The Ghana International Trade Commission was established to regulate international trade in Ghana in accordance with world trade rules. However, local businesses have complained about the lack of protection they receive. Ghana has zero percent tariff quotas and zero percent special safeguards. The gap between the bound and applied most favored nation tariff rates is significant. Ghana’s straightforward average final bound rate is 92.0%, while the simple average MFN applied is 12.1%.
Economic Performance
Ghana’s economy is currently struggling with its worst financial crisis in decades. The inflation rate soared to 54.1% in December 2022, marking the highest level in 21 years. The country had made some economic strides after President Nana AkufoAddo’s new administration assumed power in January 2017 and successfully curbed inflation. During the previous government’s tenure in 2016, inflation stood at 15.4%, but by the end of 2019, it had dropped to 7.9% and remained in single digits until the outbreak of the COVID-19 pandemic in March 2020.
Local investors face discrimination, particularly in terms of land use and property ownership, compared to international investors. State-run enterprises, except for a few profitable ones, consume an unequal share of government resources and attention. Private entrepreneurs participate in primary commodity production and trade, with the exception of oil and cocoa, which are subject to significant levels of state control
The country’s economic growth has been volatile, with growth rates of 8.7% in 2017, above 6% in 2018, 6.5% in 2019, and only 0.4% in 2020. The IMF forecasts a growth rate of 4.2% for 2021. Oil has become the country’s second-highest income earner after cocoa, and other economic activities are also crucial for the country’s economic future.
The economy has benefited from continued donor support and high levels of remittances from abroad. However, official development assistance as a share of GDP has decreased significantly. Persistent challenges to economic growth include high inflation and a weakening currency, both of which have affected the fiscal deficit and the country’s ability to make necessary adjustments. Public debt amounted to 78.3% of GDP in 2022, further compounding these challenges.
Despite these obstacles, there have been some positive developments in the agriculture and tourism industries. The government’s Planting for Food and Jobs campaign has boosted agriculture, while the Year of Return initiative in 2019 generated significant revenue from tourism. However, the manufacturing sector has faced challenges, including high inflation, a weak currency and a shortage of qualified staff.
Resource Efficiency
Ghana’s government does not efficiently use available human, financial and organizational resources, and sometimes misallocates all its resources. If efficiency improves, it can often be attributed to outside intervention, as demonstrated by the most recent cooperation with the IMF in 2020. The lack of progress is primarily due to lengthy bureaucratic delays in implementing policies and a lack of professionalism. The use of resources (both material and immaterial) is politicized and can be subject to irrational decision-making.
State resources are wasted through corruption and a noticeable lack of customer-oriented service culture, sometimes even in the tourism sector. Politically motivated dismissals or removals have been observed at the cabinet level, particularly involving potential presidential contenders. A change of government typically necessitates a reshuffle in the higher echelons of administration as well.
Despite these obstacles, there have been some positive developments in the agriculture and tourism industries. The government’s Planting for Food and Jobs campaign has boosted agriculture, while the Year of Return initiative in 2019 generated significant revenue from tourism. However, the manufacturing sector has faced challenges, including high inflation, a weak currency and a shortage of qualified staff
As of September 2020, Ghana’s debt-to-GDP ratio was 71% – the highest such level in the last four years. This was attributed to three main factors: the havoc caused by the coronavirus pandemic, the cost of cleaning up the banking sector, and the need to meet energy sector liabilities. Consequently, the country abandoned the fiscal rule adopted in 2018, which aimed to cap the budget deficit at 5% of GDP annually. The government now plans to reduce the deficit to 8.3% of GDP in 2021 and below 5% of GDP by 2023.
Once a new government settles in, with the next elections four years away, policy is generally relatively coherent. Policy incoherence is partly due to inbuilt structural problems and divergent political interests – especially due to regional divisions and those within the ruling party. While competition between ministers and state agencies exists, as in any other democracy, these actors have not seriously blocked policymaking processes when the political will from the center has been strong.
The coordination style is hierarchical and bureaucratic, and entirely personalized – that is, focused on the person of the president and his significant allies. Some overlap in responsibilities still exists, especially between ministries and public institutions aligned with specific ministries, as shown in the critical area of migration policy. An essential challenge for Ghana is donor cooperation, which has been partly solved by the multi-donor approach employed in the country. To date, the 2017 IMF agreement has been implemented coherently and has not been seriously challenged by internal actors, including the opposition.
Civil society actors are encouraged to participate in agenda-setting and policy formulation up to a certain level, particularly when the government wants to display its commitment to transparency or address specific pressing issues. Civil society is also engaged once it becomes evident that its support is needed to provide necessary services to the population, such as in the health care sector. Sometimes, specialized NGOs, especially if they are foreign-funded, are tapped in order to overcome a lack of expertise within state institutions.
The government has also actively encouraged civil society actors to become stakeholders in the education system in order to accelerate the progress of initiated reforms. However, elected politicians and officials in public administration still show an aloof or even arrogant attitude after elections or try to instrumentalize civil society organizations for their ends.