The IMF is experiencing a busy year in Africa, as seen by its recent approvals of significant credits to Ghana and Côte d’Ivoire. Despite sharing similarities in the challenges faced due to limited international finance and high interest rates imposed by commercial lenders, the two neighboring economies in West Africa, Ghana and Côte d’Ivoire, have taken divergent paths.
Ghana and Côte d’Ivoire, often viewed as brotherly rivals, pursued contrasting economic strategies under their respective leaders, Kwame Nkrumah and Félix Houphouët-Boigny. Nkrumah championed a fast-track industrialization approach, state socialism, and non-aligned diplomacy, aiming to surpass Houphouët-Boigny’s agrarian-based plantation economy and small modern capitalist system, which maintained close financial and security ties with France, their former colonial power.
Neither strategy delivered a decisive victory. Ghana’s economy has experienced fluctuations over time but has successfully nurtured a remarkable group of entrepreneurs, technology innovators, and internationally recognized artists, writers, and musicians. However, the country’s finances are currently struggling due to a combination of the pandemic, the conflict between Moscow and Ukraine, and imprudent borrowing.
Ghana has managed to establish a reliable multi-party system, where ruling parties are frequently voted out by the electorate. Nevertheless, signs of frustration among voters, particularly the youth, are growing. Many accuse the political class of recklessness and favoritism, as inflation inches close to 50% and job prospects for school graduates dwindle.
In contrast, Côte d’Ivoire’s technocrats and its substantial cash-crop sector, along with French and Lebanese investors in processing and manufacturing, have propelled economic growth over the past three decades. The country’s progress was only interrupted by political turmoil. Approximately ten years after Houphouët-Boigny’s passing, a previously quiescent military orchestrated a coup, mishandling the aftermath and sparking a civil war and disputed elections.
From that crisis emerged President Alassane Dramane Ouattara, a highly skilled technocrat and former deputy managing director of the IMF. He successfully steered the economy back on track but faced challenges in the political realm. Now serving his third term, the issue of succession looms large.
Ouattara’s effective economic management is evident in the IMF’s approval of a $3.5 billion credit to support Côte d’Ivoire’s plan to achieve “upper middle-income” status.
On the other hand, Ghana’s IMF credit is explicitly a bailout. In December, the Finance Ministry in Accra announced a suspension of repayments to select international lenders, with the intention to restructure both domestic and foreign debt. Initially, officials anticipated completing the restructuring within a month and subsequently signing a deal with the IMF.
However, six months later, Ghana has obtained its IMF agreement, which includes an immediate injection of $600 million and an additional $600 million by year-end. This injection has stabilized the cedi and reduced the inflation rate, but the debt restructuring agreement is still pending.
Both countries face significant political questions, which will be explored in-depth in our coverage of Ghana and Côte d’Ivoire. Additionally, this week’s edition focuses on the following:
The prospects of a lasting ceasefire between Sudan’s warring generals and the resumption of negotiations for a political transition.
The challenges facing Bola Ahmed Tinubu, set to be sworn in as Nigeria’s next president on May 29, as his government lacks authority in the legislature and faces legitimacy concerns.
The trial of oppositionist Ousmance Sonko in Senegal and President Macky Sall’s approach to handling the growing unrest.
The exposure of corrupt contracts by allies of President EmmRephrased:
The IMF is having an active year in Africa, evident from its recent approval of a $3 billion credit to Ghana and a $3.5 billion credit to Côte d’Ivoire. While both countries face similar challenges regarding limited international finance and high interest rates from commercial lenders, their economic trajectories have diverged significantly.
Ghana and Côte d’Ivoire, considered as competing neighbors, have pursued contrasting economic strategies since the time of their independence leaders, Kwame Nkrumah and Félix Houphouët-Boigny. Nkrumah focused on rapid industrialization, state socialism, and non-alignment, aiming to outpace Houphouët-Boigny’s agrarian-based plantation economy and small capitalist system with close ties to France, the former colonial power.
Neither approach resulted in a definitive victory. Ghana’s economy has experienced ups and downs, but the country has successfully nurtured a talented group of entrepreneurs, technology innovators, and internationally renowned artists, writers, and musicians.
However, Ghana’s finances are currently struggling due to a combination of the pandemic, the conflict between Russia and Ukraine, and imprudent borrowing.
Ghana has established a reliable multi-party system where ruling parties are frequently voted out by the electorate. However, there is growing frustration among voters, particularly the youth, who accuse the political class of wastefulness and favoritism. With inflation approaching 50% and diminishing job opportunities for graduates, these sentiments are gaining traction.
In contrast, Côte d’Ivoire’s technocrats and a thriving cash-crop sector, supported by French and Lebanese investors in processing and manufacturing, have fueled economic growth for the past three decades. The country’s progress was interrupted by political turmoil when, around a decade after Houphouët-Boigny’s death, a previously inactive military initiated a coup, mishandling the aftermath and triggering a civil war and disputed elections.
Out of this crisis emerged President Alassane Dramane Ouattara, a skilled technocrat and former deputy managing director of the IMF. He successfully steered the economy back on track but faced challenges on the political front. Now serving his third term, the issue of succession looms large.
Ouattara’s effective economic management is exemplified by the IMF’s authorization of a $3.5 billion credit to support Côte d’Ivoire’s plan to achieve “upper middle-income” status.
On the other hand, Ghana’s IMF credit is unequivocally a bailout. In December, the Finance Ministry in Accra announced the suspension of repayments to select international lenders, with the aim of restructuring both domestic and foreign debt. Initially, officials expected the restructuring to conclude within a month, followed by a deal with the IMF. However, even after six months, Ghana has secured its IMF agreement, including an immediate injection of $600 million and an additional $600 million by year-end. This injection has stabilized the cedi and reduced inflation, but the debt restructuring agreement is still pending.
Both countries face significant political questions, which will be explored in detail in our coverage of Ghana and Côte d’Ivoire.
