The Minister of Food and Agriculture’s recent comment on a campaign platform has been found to have serious economic consequences for the country, apart from heightening the political tension.
The Member of Parliament for Abetifi, Bryan Acheampong, who was speaking at a campaign rally in the Nsawam-Adoagyiri constituency insisted that the New Patriotic Party (NPP) “would do whatever it takes to win the elections” because it is “a political party that has pastors, imams, and traditionalists.”
He further told the opposition parties to “burn the sea if you don’t understand, we’ll win and continue with our good works” insisting that the NPP is an election-winning machine that would make it practically impossible for the National Democratic Congress (NDC) to win this year’s election.
But considering the comment from the economic point of view, senior lecturer at the University of Ghana Business School, Professor Godfred Alufar Bokpin revealed that ‘there are economic costs attached to such “unguided” political statements, especially in an election year.’
Prof. Bokpin tells The High Street Journal that such comments heighten economic uncertainty in the economy which causes investor confidence to diminish. He noted that investors and high-net-worth persons in the country prioritize political risk and may change their behaviour in response to comments that seem to inflame political tension.
Describing such comments as “noise” from the perspective of investors, he stated that it can disrupt the exchange rate market as the uncertainty may force demand for dollars and also impact foreign direct investments.
“We should be mindful that this comment could heighten the economic uncertainty that could cause volatility in the foreign exchange market. We should be looking at organizing our elections without major disruptions to our foreign exchange market in terms of the economic fundamentals but I think by and large these comments are not good,” he explained.
He added that “investors don’t want noise. It can impact portfolio flows. It can impact foreign direct investment. Apart from that, it could also impact how even high-net-worth individuals decide to manage their wealth. People may demand more dollars if they think that the stakes are very high, there is potential for violence, and all of that. It doesn’t help at the end of the day.”
Commenting on whether such comments can impact the country’s political risk profile on the international capital market, Prof. Bokpin indicated that luckily with the restructuring of bonds, Ghana has been shut out of the international capital market hence such comments cannot have an immediate effect on the country.
However, there is a high tendency for such utterances to affect the overall economy. “Because we have been shut out of the international capital market, it is not expected that it will play a role in terms of we going to borrow from the market. If there is a change in government, we don’t know what will happen but given that we just restructured our Eurobond, it may not be that immediate.”
“Overall these comments both from the NPP and the NDC do not inure to the benefit of the country in terms of moderating the political temperature because, at the end of the day, all these things heighten the political risk,” he clarified.
