Ghana’s cedi has recorded its best performance in over three decades, offering a rare win for Finance Ministry and Bank of Ghana officials.
But while policymakers can celebrate short-term currency stability, technology and policy analyst Bright Simons warns that the real test lies in whether such gains translate into long-term economic transformation, industrial growth, and job creation.
Simons draws a key distinction between political accountability which is the ability of leaders to deliver on promises such as stabilising the cedi and policy accountability, which asks whether economic policies actually foster sustainable development and social welfare. “Holding the exchange rate down is important,” he explains, “but it must also create conditions that attract investment, build manufacturing capacity, and create jobs.”
Industrialisation and Multinational Manufacturing
Ghana has historically attracted multinational manufacturers. After independence, companies such as Unilever, Nestle, Cadbury, Guinness, PZ, Philips, Sanyo, Volkswagen, and Siemens established operations in the country. In Asia, similar strategies attracting foreign firms to bring capital, technology, and expertise laid the groundwork for local industrial champions. Taiwan, South Korea, Vietnam, and Thailand leveraged this model to drive rapid industrialisation.
Yet, according to Simons, Ghana’s experience has been hampered by exchange rate instability. “The behaviour of the cedi over decades has made Ghana a risky market for global multinationals,” he observes, limiting the growth of domestic manufacturing capacity despite repeated investment commitments.
Unilever Ghana: A Bellwether of Industrial Struggles
To illustrate this point, Simons analysed 30 years of financial and operational data from Unilever Ghana, one of the country’s longest-serving multinational firms. Despite consistent local investment, the company’s performance in hard-currency terms has been disappointing:
- Revenue fell from $111 million in 1994 to just over $65 million in 2024, a compound annual growth rate (CAGR) of –1.74%.
- Shareholder equity peaked at $64.3 million before plummeting to $6.3 million in 2022, now standing at $15.9 million.
- Average net margin over 30 years was 5.5%, far below the 12–16% typical for successful global manufacturers; in 2020, it fell to –11%, with return on equity at –139%.
- Market capitalisation rose from $19 million in 2000 to over $700 million in 2008, then fell below $120 million today.
Simons notes that some decline resulted from the company scaling back complex operations in textiles and timber processing. But the larger factor, he argues, was currency volatility, which eroded returns in dollar terms. While Unilever’s market cap in cedis has grown, the company remains a cautionary tale for multinationals considering Ghana as a manufacturing base.
The Exchange Rate Factor
At the heart of Ghana’s industrialisation challenge, Simons says, is the exchange rate. Short-term currency wins, while politically satisfying, are not enough to build long-term investor confidence. Multinationals need predictable and stable conditions to plan, invest, and grow manufacturing operations sustainably.
“Ghana’s industrialisation problem is fundamentally an exchange rate story,” he explains. “Political victories in currency management are necessary, but policy consistency over decades is what truly attracts and retains multinational manufacturers.”
Policy Implications
The lesson for Ghana is clear: stabilising the cedi is a start, but long-term industrialisation demands sustained policy accountability. Policymakers must integrate exchange rate management with broader industrial strategy, infrastructure development, and investment incentives to create a predictable environment for both foreign and local investors.
Simons concludes: “Political wins are gratifying. But the real victory will come when the cedi’s stability translates into industrial growth, manufacturing jobs, and meaningful economic transformation for Ghana.”
