Deloitte warns Ghana and Nigeria about economic challenges in 2025

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Global professional services firm Deloitte has cautioned the governments of Ghana and Nigeria about the economic hurdles they face in 2025. According to Deloitte, high inflation, increasing debt, currency depreciation, and tight monetary policies pose serious risks to growth. The firm emphasized the urgent need for both nations to tackle these issues to achieve sustainable economic development.

Impact of Inflation and Currency Depreciation

In its Global Economic Outlook – January 2025, Deloitte pointed out that economic expansion in West Africa has been hindered by the rising cost of goods and services. As monetary authorities attempt to control inflation, interest rates have surged, further slowing economic growth.

“Nigeria and Ghana have also been grappling with currency volatility, which has severely affected their capacity to import essential raw materials and equipment needed to drive production. In the first half of 2024, the Nigerian naira depreciated by over 40%, while the Ghanaian cedi lost more than 20% of its value against the US dollar,” the report noted.

Despite these economic difficulties, Deloitte expressed optimism about Ghana’s short- to medium-term prospects.

“Compared to Nigeria, Ghana appears to have stronger growth prospects. Its economy expanded by 4.7% year-on-year in the first quarter of 2024, largely fueled by a robust 6.8% year-on-year growth in the industrial sector,” Deloitte reported.

The firm further highlighted that the agriculture and services sectors experienced moderate growth, with agriculture expanding by 4.1% and services by 3.3% in 2024.

Ghana is also making progress in overcoming its debt crisis, largely due to the government’s restructuring efforts. Deloitte observed that the Bank of Ghana’s monetary policy measures have contributed to easing inflationary pressures.

“The effects of ongoing pro-market government reforms and debt-restructuring and sustainability initiatives (especially in Ghana) are expected to have started yielding some results, boosting productivity and overall economic output. A more stable domestic currency will also contribute to the projected recovery in these countries,” Deloitte stated.

Deloitte forecasted a steady improvement in Ghana’s economy, predicting growth rates of 5.1% in 2025 and 5.3% in 2026. The report suggested that overall macroeconomic stability in West Africa is expected to gradually improve during this period.

However, Deloitte also warned that rising debt remains a significant concern for both Ghana and the wider African region.

“Rising debt is a growing concern in West Africa and Africa as a whole. Ghana received its fourth disbursement tranche of US$360 million in the last quarter of 2024, bringing total disbursements received from the International Monetary Fund under the Extended Credit Facility to US$1.92 billion,” the report noted.

To address fiscal challenges, Deloitte expects the Ghanaian government to continue implementing fiscal consolidation measures between 2025 and 2026.

“We expect the Ghanaian government to continue its fiscal consolidation between 2025 and 2026. Government will support this with revenue generation reforms that could include raising existing taxes or tariffs, and the introduction of new taxes such as a green tax. These measures are forecast to lead to a narrowing of the fiscal deficit as a percentage of GDP from 4.4% estimated in 2024 to 3.9% in 2025 and 3.6% in 2026,” Deloitte predicted.

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