GHANA ELECTION CHALLENGES MAY SIDELINE GAS INDUSTRY

(Previously reported in The Inkerman Group’s blog)

Ghana survived another painfully close, and highly contentious, election last week, but that does not mean the political fighting is over. Rumblings from the Nana Akufo-Addo’s losing opposition New Patriotic Party (NPP) suggest that the two-time presidential candidate is not willing to concede just yet. Results released from the election on 07 December 2012, show that incumbent President John Mahama secured 50.7% of the vote, whilst Akufo-Addo took home 47.7% share of the ballots. But because Mahama barely edged the 50% voter threshold, he will not have to endure a run-off election challenge, that is unless Akufo-Addo’s team can stop him. At this stage it appears unlikely that the NPP will be able to successfully contest the election outcome, suggesting that Mahama will ultimately be responsible for the country’s lagging gas infrastructure policies.

A Caustic Contest…

Ghana boasted the kind of cacophonous, mud-slinging election season that would make media kings in the US jealous. To be sure, in the lead up to the December contest, NPP campaign managers frequently hurled insults at Mahama, accusing him of being a “womaniser”. Not content to be the ‘better man’, Mahama and his camp did nothing to stop the flood of rumours that Akufo-Addo is a “drug addict”.

Although the build up to the election was one marred with slander, the election itself was praised by international observers, including the Economic Community of West African States (ECOWAS), with commentators describing it as smoothly run and “fair”. Nevertheless, the opposition party has already cried foul, with NPP National Chairman, Jake Otanka Obetsebi-Lamptey, especially adamant that the ruling National Democratic Congress (NDC) resorted to trickery to secure a win for Mahama. Seething at the vote count, Obetsebi-Lamptey wrote a scathing letter to the Electoral Commission (EC), the very same organisation he accused of working hand-in-hand with the ruling party to ensure that Mahama stayed put. In the petition, which Akufo-Addo later circulated on his Facebook page, Obetsebi-Lamptey asked that EC not only perform a nationwide audit on the voting machines, but that it also organise a recount of the presidential ballot. Indeed, NPP leaders, including Akufo-Addo, allege that there were systematic abuses which left a number of voters disenfranchised, including the late delivery of ballots. In particular, NPP supporters were left frustrated with the use of Ghana’s new Biometric Voting Machines (BVM), which operated under the so-called “NVNV” policy” (No Verification, No Vote). Indeed some users of the BVM machines claimed that they broke down, preventing eligible voters from engaging in their civic rights. Despite NDC party members praising the machines, Obetsebi-Lamptey believed they were shoddy and untested (Ghana became one of the first countries in Africa to use them). As a result, Obetsebi-Lamptey announced to the local media that his party was considering “legal action” to annul Mahama’s presidential victory. As can be expected, Mahama, his NDC Party, and the EC have yet to officially comment on the accusations.

As for the election outcome, there appears to be three possibilities. For one, Obetsebi-Lamptey may be acting as Akufo-Addo’s ‘pit-bull’. Whilst Akufo-Addo, a man praised for his friendly demeanour and his willingness to engage with Ghana’s youth, remains relatively quiet, (although he did urge his supporters to remain calm), Obetsebi-Lamptey is doing his political dirty work by fighting tooth and nail to ensure a NPP victory. In the long-run, Obetsebi-Lamptey’s aggressive stance may in fact be a calculated move to position him as a future candidate for the NPP. Another possibility is that there may in fact be some truth (albeit, minimal) to accusations of voter fraud. To put it into perspective, Akufo-Addo narrowly lost the most recent presidential election run-off with late president, John Atta Mills, in 2008. (Mills secured 50.23% of the votes, compared to Akufo-Addo’s 49.77%). What is interesting about this particular election is that, unlike many tight races on the African continent, Akufo-Addo peacefully conceded the victory, and walked away without a fight. In the end, the fact that Akufo-Addo’s party is willing to fight this particular election may either be indicative of electoral fraud, or, perhaps more accurately, the NPP is playing the role of a sore loser. In the end, Akufo-Addo’s team may only be delaying the inevitable, as well as sidelining Ghana’s other pressing issues, including the country’s need for a total overhaul of its hydrocarbon policies.

What Does This Mean for Business?

The bitter rivalry that has ensued between Mahama’s dominant National Democratic Congress (NDC) party and Akufo-Addo’s opposition NPP is by now well understood. What remains far more concerning, however, is what impact the election will have on foreign investment. If Akufo-Addo manages to get his well (an unlikely feat), analysts see a president with a more pro-business stance that than of the centre-left Mahama. This is not to say the incumbent president is against foreign investment. On the contrary, Mahama’s NDC is well aware of the importance that international development plays in Ghana. To begin with, the incumbent president is expected to face pressure to form Ghana’s oil and gas laws in 2013. This, of course, will prove easier said than done. Ghana appears behind on its plan to revolutionise the hydrocarbon sector, despite endless promises that it would be able to produce gas on a commercial scale by February 2013. Officials hoped that the Ghana’s Gas Infrastructure Project would allow the country to profit from its fields in the Western Basin, the gas supply of which could  be processed and used domestically, as well as sold on the international market. But aside from complaints from residents who believe the development project at the Atuabo plant will pose an environmental threat, there is the cost: US$1.2 Billion. No matter: international investors appear keen to get in on the action, with China leading the way. In 2010, China Development Bank approved a loan of US$13 billion to the West African nation, 30% of which would go towards the development of Ghana’s oil and gas infrastructure. In the end Mahama may have barely survived the election, but his biggest test, that of ensuring profitability within Ghana’s out-of-date gas industry will undoubtedly continue.

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