Ghana election runoff close to call – Analysts

Ghanaians vote tomorrow Sunday December 28, 2008 in a too- close-to-call presidential runoff that will leave the winner with oversight of the country’s newly discovered oil reserves at a time of declining commodity prices.

Ruling-party candidate Nana Akufo-Addo, 62, who won 49 percent in the initial vote on Dec. 7, has promised to continue the pro-business policies of outgoing president John Kufuor. Opposition leader John Atta Mills, also 62 and a university professor and former vice president, pledges to cut poverty and help consumers cope with higher fuel and food prices. He won 48 percent in the first round.

Ghana, the world’s second-biggest cocoa grower and Africa’s No. 2 gold producer, is grappling with declining export revenue caused by the worldwide recession. Oil was discovered off the west African nation’s coast last year; U.K. explorer Tullow Oil Plc says it expects to begin extraction by 2010.

With Parliament almost equally split, there’s a “risk of significant post-election executive-legislative gridlock leading to policy paralysis,” Sebastian Spio-Garbrah, Middle East and Africa analyst at the New York-based Eurasia Group, said in a note to clients.

In legislative elections that coincided with the first-round presidential voting, the National Democratic Congress won 114 seats to the ruling New Patriotic Party’s 107. Seven seats went to smaller parties and independent candidates, while two seats are disputed.

Ethnic Slurs

Tomorrow’s runoff is the second since Ghana returned to multi- party democracy in 1992. Kufuor, who is stepping down after two terms in office, won in a second-round election in 2000 that saw the NPP take power from the NDC.

The first-round voting avoided the widespread unrest witnessed during this year’s elections in Kenya and Zimbabwe. Campaigning for the runoff has been less amicable, with both sides making vitriolic statements, ethnic slurs and threats of violence, Spio-Garbrah said.

There are “growing fears that whoever loses the runoff may not concede,” he said. And whatever government emerges “will have to take “bold and painful reformist steps to stabilize the economy amid a rising budget and current-account deficit, as well as an overdependence on foreign aid, remittances, debt and commodity exports.”

Gross domestic product grew by 6.3 percent last year, up from 3.7 percent in 2000. The price of gold — which accounts for 41 percent of exports — has slumped 18 percent from its March record of $1,032.70 an ounce. Cocoa, which accounts for 27 percent of exports, is the best-performing commodity this year among 19 tracked by the Reuters/Jefferies CRB Index, gaining 28 percent since the end of 2007.

Inflation Surges

Ghana’s budget deficit is likely to exceed 10 percent of GDP this year and next, while the 2008 current-account deficit may widen to 13.2 percent from 10.9 percent in 2007, according to the International Monetary Fund.

Inflation, which fell to 10.7 percent last year from 32.9 percent in 2000, has surged amid rising food prices, reaching 17.4 percent last month.

Ghana was the first sub-Saharan African nation to gain independence from its colonial ruler, Britain, in 1957. The country’s first president, Kwame Nkrumah, a proponent of a pan- African government, was ousted in a military takeover in 1966. The country has experienced four more coups since then, two of which installed Jerry Rawlings as the nation’s president.

Tomorrow’s presidential race is so close, it “could be anybody’s call,” Emmanuel Akwetey, executive director of the Institute for Democratic Governance, said by telephone from Accra, Ghana’s capital. “There’s fatigue, it’s Christmas and there are financial woes. There is a risk of apathy.”

Credit: Emily Bowers & Mike Cohen

Source: Bloomberg