News

Press Release

Accra, February 10

Falling value of the cedi is hurting traders

The value of the cedi has been falling sharply in recent weeks, and as expected, Ghanaian businesses and traders have started complaining about the negative effects on their businesses. They have reason to worry. The depreciating cedi has the following negative consequences:

1. It eats away the working capital of businesses. Traders who buy their goods from foreign countries such as Togo, Burkina Faso, Europe, Dubai, China, and others have to change their cedis into foreign exchange before importing the next stock of goods for sale. When the value of the cedi falls as quickly as we are seeing now, traders sell their goods and change their cedis into foreign exchange only to realise that they are unable to buy the same amount of goods their capital was previously able to buy. Hence, instead of their businesses expanding, their businesses rather shrink.

2. In that case, the only option left to traders is to increase the prices of their commodities as a way of protecting their working capital. But the resulting high prices on the market for both food and non-food items make the cost of living very high for Ghanaians. “Chop money” for the market becomes inadequate, and women in particular have to struggle with the reduced quantity or quality of the banku, fufu, tuozafi, akple, rice, ampesi, etc, they serve to their families. But that does not bring any comfort to business people because high prices lead to lower sales which eventually hurt businesses anyway.

3. Even exporters who could have benefitted from the falling value of the cedi are unable to do so because the prices of imported raw materials go up when the cedi’s value falls. But worse still, high water and electricity tariffs, increased fuel prices, and high taxes implemented by the NDC government have combined to make the cost of production so high that most producers have had to cut back on production in recent times. Such constraints on the production side of the economy make it difficult for Ghanaian exporters to benefit from the falling value of the cedi.

So the question the New Patriotic Party is asking is: What economic strategy is the NDC government pursuing? What are the benefits of the falling cedi? What is the government doing to help business and trade where the overwhelming majority of our people are employed and where the falling cedi has its most devastating impact?

We call on the Mills-Mahama government to sit up and take immediate steps to deal with the depreciating cedi. They need to do this for our businesses and for the economy.

Signed:
Kwaku Kwarteng
Policy Advisor, NPP