As the government gears for the National Economic Dialogue, some business community players are proffering strategic issues that must be discussed at the forum to turn around the fortunes of the economy.
The latest association to do so is the Ghana Union of Traders Association (GUTA) which believes that the stability of the local currency should be one of the foremost issues that the forum must address.
Ghana’s cedi has been experiencing a persistent depreciation inviting hardships in the economy. Traders and individuals over the years have bemoaned the free fall of the cedi. While it increases the cost of doing business, it further increases inflation, resulting in worsening standard of living for citizens, especially low-income earners.
Analysts and other economists have criticized the Bank of Ghana’s methods of stabilizing the currency. The practice of the Central Bank pumping forex into the market has been described as reactive, short-term and unsustainable.
Economists such as Dr. John Kwakye of the Institute of Economic Affairs (IEA) have called for a holistic and lasting solution to the cedi’s depreciation problems.
Amidst the weak cedi and the upcoming National Economic Dialogue, GUTA believes the upcoming forum presents a golden opportunity for the country to reset and stabilize its exchange rate regime.
In an interview with The High Street Journal, the President of GUTA, Dr. Joseph Obeng argues that foreign exchange stability is the foundation on which other important economic indicators depend. He mentioned that interest rates, lending rates, and inflation heavily depend on the stability of the local currency.
Ghana’s economy, Dr. Obeng says cannot achieve favourable inflation and interest rates that are friendly business and economic development friendly if the cedi is not stable.
A volatile cedi increases import costs, driving inflation as businesses pass these costs to consumers. This compels the Bank of Ghana to tighten monetary policy, resulting in higher interest rates that stifle business growth and investment. Dr. Obeng asserts that managing foreign exchange effectively is crucial for Ghana’s economy to overcome these challenges.
As Ghana prepares for the economic dialogue, Dr. Obeng says the forum must prioritize measures that deal with foreign exchange issues. In his view, the discussions should focus on measures such as boosting exports, reducing imports, and enhancing local manufacturing and agro-processing.
“I think the major problem of our economy is just around one problem. That is the stability of the local currency. How we’ll be able to strengthen the cedi. How are we going to achieve this? These are the things that drive positive indicators, like bringing down inflation and interest rates. The dialogue should seek to create measures and adopt policies that ensure the stability of the cedi. We have to find ways to control and contain the foreign exchange,” Dr. Obeng told The High Street Journal.
He added: “The dialogue should also find how we should be able to be self-sufficient. This will enable us to do the import substitution that we have been talking about so that we’ll be able to address some of the concerns about the depreciation of the cedi.”
For the leader of the traders association, the stability of the cedi remains the fulcrum upon which Ghana’s broader economic revival depends. Policymakers, businesses, and financial institutions must align to make currency stabilization a top national priority during the national dialogue.
