The Chief Executive Officer of Critical Mass International (CMI) has said that the impressive performance of the Ghana Cedi against the major trading currencies has no structural backing, hence cannot be sustained. He made this comment during an interaction with student politicians in the University of Cape Coast.
Paa kwesi Bekoe Amissah- Arthur former Vice President.
According to the him, the constant depreciation of the cedi against other major trading currencies since independence is as a result of lack of comprehensive economic plan, measure and structure to support the strength of the cedi.
Experts hold that the Ghanaian cedi has depreciated for over Ten Thousand (10, 000%) percent since 1957. There have been times where governments have resorted to adhoc measures to halt the cedi depreciation but over time these measures prove incapacitated.
The NDC government in 2016 through some measures stabilized the cedi only for it to begin depreciating immediately after the December poll. When the NPP took over, there was a sharp depreciation as the cedi moved from 4.27 a $1 to 4.70 a $1 in a space of two months. However, the government has turned the situation around making sure the cedi appreciates in value for the past five weeks. The cedi has since appreciated and is currently 4.21 a $1 down from 4.70.
Seth Terkper former minister of finance and economic planning
Nevertheless, Mr. Anyaba argue that when the country’s economic structure does not support the strength of the cedi, whatever performance the cedi puts up isn’t natural and it is only a matter of time when reality will set in.
“The issue of our cedi struggling against major currencies does not require doctorate degree in economics to comprehend. We need these major trading currencies in order to engage in international trade since the cedi isn’t an international currency. For this reason, we need to generate more dollars to be able to buy the things we need from the international market. Simple economics teaches that your exports must exceed imports so you will always positive balance of payment sheet. Exports bring more dollars into the system while imports drain the dollars. As a result, if you do more imports than exports as a nation, what it means is that you will have more local currency (cedi) chasing small foreign currency (mostly dollars) in the system. We all are aware that when demand chases supply, supply becomes expensive” the CEO analyzed.
On the Ghanaian situation, he bemoaned the situation where there have been little or no efforts by successive governments to change the structure of the economy for it to be not only an export led one but also a value addition one.
“……………… what progressive regimes in progressive nations have done is to minimize their imports by resorting to the domestication approach. With this nations try as much as possible to consume, use or utilize what is produced and distributed within the economy. A conscious attempt is made to always prioritize local content. For instance, when it comes to contracts, foreign firms are considered only when local firms prove not to have the requisite capacity. This approach minimizes the outflow and demand for foreign currency. Again, strides are made to maximize exports in order to generate more foreign currencies. For this reason, successful regimes have ceased from exporting raw materials (which are cheap) and rather adding value to the raw materials. When you export raw materials, not only are you selling them cheap only to buy its finished products at an expensive price but you are also exporting jobs. Successive governments after Nkrumah failed in this regard hence, the embarrassment of the cedi among major trading currencies. Without a sound economic structure modeled along these policies, even Carl Marx and Adam Smith shall fail to restore hope to the cedi when they are in charge of our economic management team” the political historian asserted.
Ken Ofori -Atta Minister for finance and Economic Planning
He called for Ghanaians to rally behind the Akufo Addo regime and to support his One District, On Factory (ODOF) policy as he sees the program as the major step towards not only strengthening the cedi but towards economic emancipation.
Vice President Dr. Mahamadou Bawumia
“The performance of the cedi we are witnessing cannot be sustained because it lacks the necessary support to sustain and consolidate the gains. The proper structures as enumerated above are lacking that is why we posit that the cedi is making artificial gains. What government has done is to get more dollars to the system through borrowing and we all know this can’t be sustained. In the short to medium term, such adhoc measures are needed to bring relief to government, businesses and individuals as the economy suffer a lot when the cedi depreciates. However, government must take steps in the long term plan to restructure the economy to make it a value addition and export led economy. That is why as a socialist and a pan Africanist, I am very much enthused about the government’s ODOF policy. It is imperative that all of us support the president to succeed on this one. This initiative from where I sit, holds the key to the economic emancipation of our beloved country” Mr Anyaba advised.
He advised government to respect local content in all government procurement and contract and urged local entrepreneurs to enhance their capacity and position themselves well in order to be competitive in the global world.