Index trend
Previous Quarterly Editions
Expropriation risk: 46 45 45 51 ▲ Political violence risk:39 39 39 39 ►Terrorism risk:47 45 45 40 ▼Exchange transfer and trade sanction risk: 55 55 55 55 ►Sovereign default risk:65 65 65 65 ►
Overall Risk Temperature: 53 (Medium) TREND ►
Special topic: Political polarization
The political landscape in Ghana is increasingly polarized, particularly in the run-up to presidential and legislative elections, which take place every four years. More intensive ideological rivalry between the two main political parties — the center-left National Democratic Congress (NDC) and the center-right New Patriotic Party (NPP) — is one of the driving forces of this development, although a distinct anti-elite critique of Ghana’s two-party duopoly is also clearly evident. These trends have been augmented by the rise of social media, which are now widely used all by parties and candidates.
The presidential and legislative elections that took place in December — the ninth since the return to civilian rule in 1992 — provide further evidence of these trends. Former NDC President John Mahama won 56.6% of the votes cast in the presidential ballot, thereby avoiding the need for a run-off, and secured a landslide in the concomitant legislative ballot. However, voter turnout fell sharply from 79% in 2020 to 60.9% this time around, due to growing voter apathy and dissatisfaction with the two-party system after years of falling living standards.
An unprecedented surge in the number of independent presidential candidates to 10 suggests a desire for alternatives to traditional two-party politics. The economy was the main issue for Ghana’s 18 million voters — more than half of whom are under 35. The country is still recovering from the triple external shocks of the COVID-19 pandemic, the Russia-Ukraine war and interest rate hikes in the world’s major economies, which led to a financial crisis in Ghana and a $3 billion IMF bailout program.
The elites who have dominated the political landscape for decades are increasingly seen by voters as exploiting the state to enrich themselves and their networks at the expense of the public interest. A 2022 Afrobarometer poll found that 94.2% of voters thought that at least some of the then-president’s staff were corrupt.
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The new government, although on the center-left of the political spectrum, is unlikely to do anything to seriously jeopardize the country’s efforts to court foreign investors and is highly unlikely to resort to arbitrary acts of expropriation. This is particularly the case at present, when the government is being forced to cut public spending in an effort to restore fiscal stability and needs to attract foreign investment in order to stimulate economic growth and job creation.
NDC Finance Minister Cassiel Ato Forson, unveiling Ghana’s 204.7 billion cedi ($13.2 billion) budget to parliament in March, announced an increase in the levy on the gross output of gold and other miners from 1% to 3%, in an effort to enable Africa’s top gold producer to reap some of the rewards of the current global spike in bullion prices. This is the latest round in a ceaseless battle between the government and the extractive sector over levels of taxation, which rise and fall in tandem with the peaks and troughs of the commodities cycle.
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Although widely lauded as an exemplar of democracy in West Africa and beyond, beneath the surface of the country’s ostensibly peaceful politics lie militia groups, violent gangs and an increasingly embittered relationship between the two main parties. None of the transitions of power that took place in 2001, 2009, 2017 and 2024 were free of violence.
Public confidence in the ability of Ghana’s institutions to tackle the country’s challenges has been falling, particularly among the rising generation disenchanted with the political system and the more than half of the population who have seen their standards of living fall markedly in recent years. This has fueled fears of a wider resort to political violence if popular demands for political reform and economic development are not addressed.
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Reports of Sahel jihadis from Burkina Faso using northern Ghana as a refuge prompted renewed concerns over the threat posed by Islamist extremists. Unlike other countries in West Africa, Ghana has not suffered a single terrorist attack, but the Ghanaian authorities have been forced to divert human and financial resources to policing the highly porous, 372-mile northern border.
Sahel jihadis are using the border region as a logistics and medical rear base to sustain their insurgency and recruit fighters from the impoverished border population. To strengthen Ghana’s defenses, Mahama appointed retired army officer Larry Gbevlo Lartey as liaison officer to the Alliance of Sahel States to help tackle the overflow of terrorist activities.
Ghana’s 2025 budget seeks to restore fiscal and exchange rate stability by cutting the annual budget by 10% to $13.2 billion and harnessing technology to improve tax collection. As a result, the number of ministries has been reduced from 30 to 25, and the number of ministers from 88 to 60, heralding a sharp reduction in the size of the state.
Real GDP grew by 5.5% in 2024, compared with 3.9% in 2023, and is forecast to reach 4.4% in 2025. Inflation has slowed to 23.1% in January 2025 from a peak of 54% in 2022, while the government has set itself the target of reducing inflation to 11.9% by the end of the year by maintaining exchange rate stability and boosting food production.
Although Ghana is the fourth most indebted country in Africa, the outlook is improving. Debt restructuring is now 93% complete, with the remaining 7% accounted for by an outstanding $2.7 billion still owed to commercial creditors.
Ghana has now almost completed a more than $13 billion debt restructuring program, reducing its debt burden by $4.7 billion. Additional maturities are due in 2027–2028, which may prove challenging, but the overall debt outlook is much improved.
Reserves reportedly exceeded $6 billion in December — enough for three months’ import cover — which, along with a current account surplus and continued disbursements from the International Monetary Fund, have helped to restore stability of the cedi currency.