Bottom Line: Ghana investors breathe a sigh of relief as the Supreme Court upholds the December 2012 presidential election results and the verdict passes smoothly, with opposition criticism but with all quiet on the streets.
Analysis: As we noted in a lengthy executive report on Ghana, as well as in the previous two briefings, we did not expect the Supreme Court to rule in favor of the opposition, if only because of the implications of this for the country’s stability. The Supreme Court’s final verdict dismissed the opposition petition calling for an annulment of the election results due to alleged voting irregularities. But the process has shaken investor confidence and a new report on macroeconomic indicators shows a drastic decline that reverses last year’s trend, according to the World Economic Forum’s Global Competitiveness Report (GCR). Specifically, Ghana recorded a budget deficit of over 12% during the election year (2012), which is 100% more than its target.
Recommendation: The political crisis in Ghana has been decided, with this verdict, but it may not be over yet. What is opposition criticism of the Supreme Court verdict could gain momentum among fringe elements. We do not expect this to evolve into a major destabilizing factor, nor do we believe that the wider public will allow tensions to rise to the point of violence. On the economic level, the verdict should allow the ruling government a reprieve to focus on trimming the budget deficit to the targeted 9% by the end of this year. For foreign investors, our assessment is that the situation is stable and we will continue to follow any potential shifts within the energy sector leadership that could affect operations on a regulatory or political risk level.