Ghana, which is currently grappling with a multifaceted economic crisis, has enacted a series of unprecedented economic measures, including a surprising move by the Monetary Policy Committee of the Bank of Ghana to cut the country’s benchmark interest rate by 100 basis points, reducing it from 30% to 29%.

This rate cut is a historic decision, marking the first instance of such an action in Ghana since 2021 and standing as the first occurrence of a rate cut by an African Central Bank in the current year. The move brings an end to the pause on the benchmark rate, which had been in effect since September 2023.

Ghana’s decision to cut rates follows a significant softening in inflation, which dropped to 23.2% in December 2023 from 26.2% in November 2023 – the lowest rate recorded since April 2022.

The central bank governor Ernest Addison, who spoke to the media in Accra, said the cut was initiated in anticipation of a decline in inflation.

“The latest forecast suggests that the disinflation process will continue, and headline inflation is expected to ease to around 13% to 17% by the end of 2024, before gradually trending back to within the medium-term target range of 6% to 10% by 2025,” he said.

While expressing optimism about the disinflation process, Addison acknowledged potential risks to the inflation outlook. He stressed the need for strict implementation of the 2024 budget and a tight monetary policy stance to sustain the progress made, emphasizing the committee’s commitment to maintaining a strong policy stance to consolidate the disinflation gains in the face of an emerging economic recovery.

“These forecasts notwithstanding, there are upside risks to the inflation outlook and there is the need for strict implementation of the 2024 budget and a tight monetary policy stance to sustain the disinflation process,” he said.

“The committee noted the emerging recovery but sees the need to maintain a strong policy stance to consolidate the disinflation gains.”

The decision to cut rates coincided with other significant financial developments. Ghana recently received a $600 million disbursement from the International Monetary Fund (IMF), representing the second tranche of its $3 billion bailout program with the lender. This injection of funds is intended to support Ghana’s efforts to stabilize its economy and implement crucial reforms.

Additionally, the World Bank approved a $300 million Development Policy Financing last week, aimed at assisting Ghana in restoring fiscal sustainability and enhancing financial sector stability. These financial lifelines are essential as Ghana grapples with economic challenges on multiple fronts.

One of the critical issues faced by Ghana is its escalating debt burden. The country’s borrowing has increased substantially, leading to concerns about its ability to meet repayment obligations. To address this, Ghana has decided to restructure its debt, acknowledging the need for a comprehensive approach to managing its fiscal responsibilities.

In light of these challenges, the decision to cut interest rates has not gone out without criticism. Some argue that a rate cut may exacerbate inflationary pressures and hamper efforts to address the country’s fiscal imbalances. However, the central bank contends that this move is a strategic response to the evolving economic landscape and is aligned with the goal of fostering sustainable economic growth.

Looking beyond Ghana’s borders, attention now turns to Nigeria, where the Monetary Policy Committee of the Central Bank is set to meet on February 26 and 27 to determine benchmark rates. Nigeria’s benchmark rates have been on hold at 18.75% since July 2023.

In stark contrast to Ghana’s rate cut, analysts are anticipating further rate hikes in Nigeria, driven by the country’s inflation rates reaching a generation-high figure of 28.92% in December 2023. Some analysts even project a substantial 500-basis points hike.

While the contrasting measures of the two West African powerhouses underline the complexity of addressing economic issues in the region, the outcomes are likely going to have a heavy bearing on the economic growth of the two countries.

The aftermath of the 2023 general elections in Nigeria has continued to be haunted by the controversy surrounding the failure of the Independent National Electoral Commission’s (INEC) Result Viewing Portal (IReV) and the Bimodal Voter Registration Systems (BVAS).

The malfunction, which raised questions about the transparency and integrity of the electoral process, has prompted a fresh demand for accountability from former INEC Chairman, Prof Attahiru Jega.

INEC officials faced challenges during the February 2023 presidential and National Assembly polls. Electronic upload of election results to the IReV, as mandated by Section 60 of the Electoral Act 2022, encountered difficulties at various polling units.

The resulting public outcry led opposition parties to vehemently protest against the manual collation of results and the declaration of winners.

Prof Attahiru Jega, former INEC Chairman and Vice-Chancellor of Bayero University, Kano, attributed the breakdown to the alleged infiltration by desperate politicians seeking victory “by hook or by crook.” He expressed disappointment in the actions of these politicians, accusing them of attempting to compromise the systems designed for accreditation and electronic transmission of votes.

Jega acknowledged INEC’s consistent efforts to enhance transparency through technological advancements but highlighted the perpetual challenge posed by reckless politicians. According to him, these politicians strive to stay a step ahead, constantly trying to outsmart the electoral body.

“In 2023, INEC did its best under very difficult circumstances and a lot of these difficult circumstances were caused by the mindset of our selfish politicians who wanted to win by hook or by crook,” he said.

“INEC has over time introduced technology to make the process of election results very transparent with integrity but from my own experience when I was in INEC from 2011 to 2015;

“…and I suspect that a lot of that has continued to be so up to 2023, our reckless politicians try to be a step ahead of INEC; if you introduce something today and you try it, they try to be a step ahead of you and beat it by the next election.

“And of course, they can also use ways and means to not only truncate but also bypass something that has actually been put in legitimately to add to the integrity of the process.

“If you ask my opinion, I feel very strongly that INEC needs to tell us more about what happened with the IReV. In fact, at one point, I was even calling for a thorough public inquiry about what happened with regard to IReV.

“I feel that something has happened, that in spite of the confidence and the very articulate manner the INEC chairman (Mahmood Yakubu) had spoken about the IReV and it then failed.

“I believe that some of our reckless politicians may have infiltrated it and truncated it but INEC will take the blame for that.”

He stressed the need for a thorough public inquiry into the IReV failure, questioning the system’s integrity despite the chairman’s initial confidence. “We need to go back to the bottom of what happened with the IReV,” he said.

The controversies stemming from the IReV failure are multi-faceted. Opposition parties, dissatisfied with the manual collation of results, challenged the victory of Bola Tinubu of the All Progressives Congress (APC), who was declared the winner of the presidential election by INEC.

The electoral body’s admission that certain glitches hampered real-time result transmission further fueled suspicions. This, coupled with its successful attempt to block the move of opposition parties to inspect election materials, cast a shadow over the credibility of the entire electoral process.

The controversies surrounding the IReV failure prompted questions about the effectiveness of INEC’s safeguards and raised concerns about the susceptibility of Nigeria’s electoral infrastructure to external interference.

The compromised IReV and BVAS systems have left an indelible mark on the 2023 presidential election, giving rise to a cascade of controversies and casting doubt on the efficacy of INEC’s technological mechanisms.

Jega’s call for a public inquiry into the 2023 election is one of many, including international observers, who advocated the need for transparency and accountability in addressing the failures and ensuring the integrity of future electoral processes. The IReV failure remains a focal point in discussions about the state of Nigeria’s democracy and the challenges faced in safeguarding the electoral process against manipulations.

Amid growing concerns about declining oil revenue and transparency issues within the Nigerian National Petroleum Company Limited (NNPCL), President Bola Tinubu has initiated a series of sweeping reforms to enhance accountability in the oil sector.

The recent directive involves a fundamental shift in responsibility for crude oil sales, transferring oversight from the NNPC to the Central Bank of Nigeria (CBN).

Previously, the NNPC held exclusive control over crude oil sales, and critics argued that this arrangement lacked transparency, enabling the underreporting of earnings. Tinubu’s directive mandates the NNPC to submit all receipts for crude oil sales to the CBN for thorough vetting and documentation, aiming to eliminate potential gaps in reporting and ensuring accurate records of oil revenue.

Mr. Olayemi Cardoso, the Governor of the CBN, noted during a keynote address at the launch of the Nigerian Economic Summit Group (NESG) “2024 Macroeconomic Outlook Report,” that the directive is part of collaborative efforts between the CBN, the Ministry of Finance.

“This coordinated effort will greatly enhance the Bank’s foreign exchange flows and contribute to the accretion of reserves,” he said.

The expected stability in the foreign exchange market for 2024 is attributed to the reduction in petroleum product imports and the recent implementation of a market-determined exchange rate policy by the CBN. The reform aims to streamline and unify multiple exchange rates, fostering transparency and reducing arbitrage opportunities.

Cardoso believes that a consistent and stable exchange rate will boost investor confidence, attracting foreign investment and elevating Nigeria’s appeal to global investors.

“This reform is designed to streamline and unify multiple exchange rates, fostering transparency and reducing opportunities for arbitrage,” he said.

“The resulting consistent and stable exchange rate will not only boost investor confidence but also attract foreign investment, elevating Nigeria’s appeal to global investors.”

The governor said that the CBN is implementing a comprehensive strategy to improve liquidity in the foreign exchange markets, addressing fundamental issues that have hindered effective operations over the years.

“We are implementing a comprehensive strategy to improve liquidity in our FX markets in the short, medium, and long term. Our focus is on addressing fundamental issues that have hindered the effective operation of our markets over the years.

“Upholding the integrity of financial markets is crucial for building confidence. With the completion of an independent forensic review, we are addressing the backlog of valid FX transactions and we remain steadfast in our commitment to decisively address any infractions and abuses,” he added.

This move to enhance transparency in the oil sector has received positive reactions from experts. Kelvin Emmanuel, an energy expert and a financial analyst, stated, “I think it is a good thing that the President has removed revenue collection of crude oil sales from NNPCL, even though the revenues are actually credited to the offshore account bank of the CBN.”

Despite the positive reception, he suggested that the federal government needs to take further steps. This includes urging the NNPC to transfer its shareholding in government-owned enterprises like WAGPCO & NLNG back to the Ministry of Finance.

Emmanuel also called for a complete business process re-engineering for the NNPC and a reassessment of the importance of its retail portfolio.

“I still struggle to see the importance of their retail portfolio (NNPCL retail is a labor of love),” he added.

In parallel with these efforts, the Nigerian government has already taken substantial steps towards reforming the oil sector. The implementation of the Petroleum Industry Act (PIA), signed into law by former President Muhammadu Buhari, is believed to be a landmark move aimed at restructuring the oil and gas industry in Nigeria. The PIA aims to promote transparency, attract investments, and ensure the sustainable development of the sector.

The PIA provides a legal framework for the NNPC’s transformation into a commercially viable and transparent entity. The Act seeks to eliminate inefficiencies and mismanagement within the oil sector, fostering a more competitive and accountable industry.