2014 World Cup: Which will it be for be: football, or the economy of Ghana?
For Ghana, which is battling a massive fiscal crisis, the answer is football.
The government has ordered one of the country’s biggest industries to reduce production to guarantee enough electricity for television coverage of the World Cup.
The West African country, which is expected to suffer a double-digit fiscal deficit in 2014 for the third year in a row, told the Volta Aluminium Company (Valco), to “reduce energy consumption during periods when Ghana would be playing”. Aluminium smelters are among the biggest consumers of power and, with limited supplies, the country was facing rolling blackouts during the next few weeks when millions of television sets will turn on simultaneously for the football matches.
The country has also announced it would spend $30m buying electricity from neighbouring Ivory Coast – whose team has also classified for the tournament but plays at different times in the opening matches – to avoid the blackouts that have affected it this year.
“These plans are put in place for consumers to watch uninterruptible football matches during the World Cup,” Nana Yaa Akyempin Jantuah, an official at Ghana’s utilities regulator, said in a statement. The regulator said it would post maintenance personal to man “critical… installations during the match periods to ensure expeditious restoration of electricity in the unlikely event of an unplanned outage”.
The problems of Ghana are illustrative of the wider sub-Saharan Africa region, which with roughly 1bn people produces as much electricity as Argentina, with just 40m.
But for Ghana, the problem is especially acute because investors are alarmed at the rapidly deteriorating fiscal situation. Roughly three years after the start of oil production, which was meant to strengthen the country’s fiscal position, the public purse is looking empty and investors said cutting aluminium production and spending millions of dollars to import extra electricity would make the situation worse.
The fiscal deficit last year surged to 10.8 per cent of gross domestic product after a 75 per cent hike in public salaries over the previous two years. The International Monetary Fund forecasts that Ghana’s deficit will remain at double-digit levels this year, hitting 10.2 per cent of GDP. The government’s target is 8.5 per cent.
The financial concerns have put pressure on the government of President John Dramani Mahama, which now stands accused by the opposition of mishandling the economy.
Mahama’s party, the National Democratic Congress, introduced a new public sector salary structure in 2010 designed to motivate workers and improve service delivery. After a wave of salary hikes, the government’s wage bill now consumes roughly 70 per cent of the country’s tax revenues.
Ghana’s national team, known as the Black Stars, is due to play its first World Cup match on June 16 in Natal against the US. Those Ghanaians not in Brazil must hope the lights stay on.