Businesses which bear the brunt of the local currency have called on the government and the Bank of Ghana (BoG) to act urgently to save the falling Ghana cedi.
Companies in manufacturing, commerce and other sectors said the persistent depreciation of the Ghana cedi against major international currencies, especially the US dollar, must be checked immediately because it was slowing their businesses and pushing a lot of cost on the consumer who must pay higher for products whether essential or luxury.
The Ghana Union Traders Association (GUTA) and the Chamber of Automobile Dealership Ghana (CADEG) said the depreciating cedi had pushed the cost of goods and services to rise, making it difficult for businesses to stay afloat.
The Ghana cedi is in a record-breaking weakening cycle, depreciating 14 per cent against the dollar this year, fuelled partly by foreign exchange (forex) supply shortfalls. The local currency, which was trading in January at GH¢11.97 to a dollar on the interbank market and at GH¢12.33 in the retail market, is currently being bought at GH¢13.9000 and sold at GH¢13.9140 to the dollar at the interbank rate as of yesterday.
At some forex bureaux in Accra, the dollar is being bought at GH¢15.00 and sold for GH¢15.30. According to the Bank of Ghana’s (BoG’s) January 2024 Summary of Economic and Financial Data, the cedi started 2024 better than the same time in 2023, when it lost 20.6 per cent to the US currency, and in 2022, the cedi depreciated by 30 per cent against the dollar.
But the Governor of the Bank of Ghana, Dr Ernest Addison, told the Daily Graphic that the central bank was keeping a vigilant eye on the developments on the foreign exchange market.
The businesses want the government to take urgent steps to salvage the situation. The cost of vehicles, their parts, building materials and hardware, imported semi-finished and raw materials, electrical appliances, materials for the printing industry, among others, have all taken a hit in the recent spiral of cedi’s depreciation.
Growing concerns
GUTA in a statement signed by its President, Joseph Obeng, said the cedi’s depreciation had created a big mess for the business community, especially the trading sector. “The purchasing power of the consuming public has been affected, thereby reducing the turnover of businesses,” he said.
Dollar benchmarking
Both GUTA and CADEG cited the rising freight charges, compounded by customs duties benchmarked to the dollar at the port as part of the conditions crippling trade and commerce, leading to untold hardships for businesses and consumers.
The National Chairman of CADEG, Eddie Kusi Ankomah, decried challenges facing the automobile industry following the depreciation of the cedi. He said the vehicle dealerships were facing collapse as businesses were struggling to keep up with the frequent depreciation of the cedi to US dollar which currently stood at GH¢15 for a US dollar.
“The car dealership business is on the verge of collapse, and the reason is the dollar rate increasingly shooting up; it is unbearable. Something you bought at $10,000 which was equivalent to GH¢120,000 is now equivalent to GH¢150,000,” he explained.
Mr Ankomah, who is also the Chief Executive Officer (CEO) of Erata Motors in Accra, told the Daily Graphic that “this difference is not attributed to only the buying but to all other things in connection with import duties and clearing fees”. “These figures go up because the customs use the dollar rate to calculate duties at the port,” he added.
Import duties
Citing instances, Mr Ankomah said import duties paid by importers on some vehicles had increased by nearly 19 per cent. He stated that importers used to pay GH¢45,000 for every imported Toyota Prado vehicle in 2020. That had, however, changed significantly to GH¢229,000 this year which was quite outrageous.
The CADEG president said prior to 2017, the car dealership business flourished as he sold about 20 to 35 cars monthly. However, that has drastically changed as he could now only manage to sell three cars on the average in a month, due to the increase in prices.
On the changes in the price of vehicles, Mr Ankomah stated that a 2010-2016 Toyota Highlander which was sold for GH¢500,000, was now selling at a staggering GH¢900,000 due to the combined effect of the exchange rate, import duties and clearing fee.
He said although the business community had held meetings with the Ministry of Finance and the BoG on the way forward in making the cedi stronger, there seemed to be no serious interest from them in that regard.
“Ghana Union of Traders Association (GUTA) and the business community have sat several times with the Ministry of Finance and the Bank of Ghana to give them ideas on how to protect our currency but no one seems to take us seriously”.
“If this continues, the country will be very bankrupt and only the rich would survive; businesses would fold up because they won’t get the capital to work,” he said. Mr Ankomah said if the trend persisted into the nearest future “foreigners will take over the country because they get loans at very little interest rates, for as low as three per cent; whereas Ghanaians deal with as high as over 30 per cent interest rate. We can’t compete with them; that’s why we need the government to sit up,” Mr Ankomah stressed.
He appealed to the President and the Vice-President to take the necessary actions in ensuring that banks stopped selling dollars to businessmen from neighbouring countries and tackle the challenges head-on for businesses to flourish in the country.
source: daily graphic
