Economics and Finance expert, Professor Godfred Alufar Bokpin, has observed that some measures implemented by the central bank to ensure the stabilization of the local currency are counterproductive.
This comment from the economist comes a few days after the Bank of Ghana (BoG) directed that effective August 1, 2024, all Forex Bureaux in the country are required to verify the identities of customers using Ghanacard or passports before any transaction in Forex.
This mandatory verification, the BoG says will ensure that all forex transactions are conducted by verifiable individuals. This will also enable the bank to monitor and supervise transactions per the Foreign Exchange Act, 2006, and the Anti-Money Laundering Act.
However, Prof. Bokpin is of the view that these stringent requirements are inadvertently strengthening the operations of the black market hence exacerbating the depreciation of the cedi.
According to the economists, such stringent measures are not sustainable since the country has failed to find solutions to the fundamental problems causing the depreciation of the local currency.
“Some of the measures Bank of Ghana has put in place have a been a bit counterproductive. Sometimes, in their desire to formalize the formal system by demanding Ghanacard and other restrictions, they provide oxygen for the black market to grow,” Prof. Bokpin observed.
He added, “That has also played a role because the reality is that once from a more fundamental point of view, we have failed in stabilizing the cedi, then mere clamp down of the black market will not be sustainable.”
“Yes, we can make some progress by clamping down on the black market, let’s remember that is not sufficient to address the more fundamental issue of dollar deficit in the system, weakening economic fundamentals,” he further emphasized.
It is therefore important that the regulator complement the stringent measures curbing black market operations with policies that seek to deal with the fundamental issues causing the free fall of the cedi.
