Why Ghana Went From Hero to Zero for Investors

Ghana is learning the hard way why oil can be a blessing and a curse. The onset of commercial crude production helped to turn the West African nation into one of the continent’s top investment destinations, but also prompted successive governments to borrow to the hilt. Skittish investors offloaded Ghana’s bonds and currency, the cedi, amid doubts over the country’s solvency. The concern proved to be well-founded: In late 2022, the government caught bondholders by surprise by unilaterally suspending interest payments on its external debt ahead of restructuring talks aimed at pinning down a $3 billion loan from the International Monetary Fund. That funding was finally approved in May.

The first sub-Saharan African nation to gain independence after colonial rule, Ghana has been a bastion of stability in a region plagued by civil unrest and coups. Peaceful elections have been held regularly since the 1990s, power has changed hands between rival parties and presidents, and there is an independent judiciary and a vibrant parliament. The world’s second-biggest grower of cocoa and Africa’s No. 2 gold producer, Ghana began exporting oil in late 2010. The following year, gross domestic product leaped by almost 14%. The economy has expanded every year since then, albeit at a more modest pace, with the government’s embrace of a free-market system helping to lure foreign capital and financing.