The Ghana cedi: the way forward

The Ghana cedi, since the past three months, has been struggling helplessly against the United States dollar and has received an excessive attention from the global economic media and experts in a way never before experienced. The cedi is now described as the worst performing currency in the world. Its free fall of the cedi has been quite dramatic. The numbers appearing do not look natural and the Central Bank that is legally charged with ensuring the country’s currency has been quiet while people are calling for the head of Minister of Finance Ken Ofori Atta. Simply speaking, the situation is chaotic and seemingly insurmountable. As we write, (October 28, 2022) the dollar is selling at GHC13.85 at Forex Bureau, while the Central Bank sells it for GHC 13.01. 

Amandla, however, opines that complex as it may be the problem is not being tackled head-on.

Until recently when foreign exchange assumed the center-stage of Ghana’s economic problems because of the free fall of the cedi, anything done to assuage the effect has been slap stick at best. Ghanaian economic managers, including the Bank of Ghana have always been aware and recognized the issue of currency speculation as the crux of the matter.

It must be stated that the Ghanaian appetite for the United States dollar and other foreign currencies are insatiable. Not only that: the habit has become infectious as the country has become the place to come to for dollars and other foreign currencies. The U.S. dollar has literally become the operating currency with some local business establishments receiving only dollar payments irrespective of its illegality.

The sale of the American dollar and other foreign currencies is so open and brazen many consider it as legal and allowable by the government and the controlling agency, the Central Bank or the Bank of Ghana. The purveyors of the criminal deed are, ironically, mostly non-citizens. They do not speak or have command of any of the local languages nor the official English language. They are mostly citizens from neighboring Francophone countries, and they ‘control’ the rates disregarding the Central Bank, especially in times like these when there is the excruciating need for foreign currency to import goods from abroad for the oncoming holidays in December. Foreigners are the currency speculators in Ghana.

Obviously, the laws controlling foreign exchange regulated and supervised by the Bank of Ghana are disrespected. We agree with the Alliance for Accountable Governance (AFAG) that some banks and officials engaged in forex trading shenanigans must be prosecuted.

Prime real estate usually in prime locations are dollarized in the urban areas and cities. Meanwhile affordable housing is far from the reach of those who need it most. Traveling agencies only accept dollars or their equivalent in cedi.

How did Ghana come to this? It is not easy to comprehend the economy of a country that was beginning to reap trade surplus of late. Oman FM quotes $5 billion as the figure obtained in 2022. Other indicators also show some aspects of the Ghanaian economy picking up steam, according to the government so we find it intriguing that the same economy is bleeding in the areas of the local currency.

Food, including local crops like yams, rice, maize, plantains, are readily available but prices are comparatively higher for the average Ghanaian. The rains this year have been quite cooperative and if same continues could make dull the hardships Ghanaians are suffering from. But it is quite enigmatic that the local currency would become such an albatross setting back what could be a victorious comeback from the ravages of the Covid-19 and the effects of the Russian-Ukraine war.

We don’t believe the current situation is intractable. We propose as others have already said that the first port of call should be the import sector. Ghanaians cannot continue to be subjected to other people’s shoddy goods. Why must such innate imports like toothpick, etc. be allowed into the country? Food imports must be thoroughly examined and should be strictly limited to what is essential.  Only select imports be allowed into the country. Foreign nationals who defy laws guiding their participation in retail trade must be persecuted and fully prosecuted in court of law.

The country’s porous borders and its liberal trade policy do not augur well and need to be revisited for some injection of discipline in the system. Ghana is too loose for its own good. Democracy must be precluded from indiscipline and if it comes to the economy not even the great democracies would allow such laxity.

We have the tendency to believe that this is only temporary. This too, we believe, shall pass.

Posted by on Oct 29 2022. Filed under Editorial. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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