From all indications, the Ghana cedi is in pain, serious pain, as it continues to totter, dither, tumble, depreciate and defy all efforts to get it to perform as expected.
The cedi had over the years been exposed to several treatments, palliatives and medications, but it has not responded and has continued its downward spiral causing pain to businesses, extreme hardship to the citizens, as well as red eyes to the managers of the economy.
It has affected local Ghanaian industries, weakened investor confidence, brought in its wake unemployment, inflation and more grey to President Mahama’s already greying hair. It has also led to a reduction in the swagger in Mahama’s step and made him one of the most vilified leaders around. The cedi has, like Mahama’s reported favourite song, “Yentie Obiara”, decided not to listen to anybody.
Most of Mahama’s achievements in office such as the Atuabo Gas project, the various road infrastructural projects, the temporary solving of the energy crisis, the building of the 200 Community Day Senior High schools and the Tamale and Kumasi airport projects will pale into insignificance at his inability to tame the cedi and stabilise it .
The cedi, since its introduction on July 17, 1965, has always depreciated each year to the major international currencies, but this year’s depreciation has been unprecedented, spiralling out of control by 40 per cent and experts say anything can happen before the end of the year.
Worst performing currency
Along its tortured path, it had set so many records, including being described as the worst performing currency in the world. Now it has earned the country the tag of being the country with the most unstable currency in the world.
After its introduction, the currency metamorphosed from the cedi to the Ghana cedi, all in an effort to tame its over exuberance and its tendency to depreciate over the years.
Its introduction was part of efforts by the then President, Dr Kwame Nkrumah, to break free from the British colonial monetary system and make Ghana’s independence complete.
Along its path, on February 17, 1967, it became the new cedi after the overthrow of its originator.
In March 9, 1979, the discounted cedi was introduced under the Rawlings regime in a further effort to tame it.
Another new Ghana cedi was introduced in July 2007 by President Kufuor. At its introduction in 2007, it was 0.91 to the US dollar after four zeros were tossed off. The following year, it started its depreciating dance again and ended the year with a 15.4 per cent slide. Since then, it has never looked back.
After that exercise, the cedi has broken all records and refused to conform to all the prescriptions and medicines. In 2014, it has depreciated by 40 per cent so far and has resisted all efforts to restrain its zeal and exuberance to depreciate . Last year, it depreciated by 14.6 per cent against the dollar. According to the Economist, in 2002 it depreciated by 15 per cent and in 2008 by 15 .4 per cent.
Today, it has broken all restraints and is now being exchanged for GH¢ 3.41 to the dollar.
All efforts to bridle this nemesis called the cedi has failed. Today, Ghana is in a dither as the cedi had become a master dribbler and continues to dribble all the interventions, expert advice, leaving in its wake dumbfounded experts, professors of economics, analysts and hard-boiled businessmen with dire ramification for the economy.
In 2011, Ghana was touted as having one of the fastest growing economies but after barely three years, our cedi has the tag of the world’s worst currency. But alas, the 2011 growth is now an aberration.
Ghanaians have become economists, financial analysts and budget experts as we try to fathom how this gigantic uncontrollable fall of the monster called the cedi came about, and how in spite of the seven per cent growth rate being touted, there is gnashing of teeth and daily increases in prices of goods.
This country is the second leading producer of gold in Africa, second leading producer of cocoa in the world and can boast of other products too.
There is also the almighty oil which was expected to blaze the trail for more prosperity in the country, but has failed to save us from hardship and uncertainties.
The single spine (some say it was a trap), has led to a horrendous increase in the wage bill and also resulted in 70 per cent of all revenue being spent on wages. The depreciating price of gold, cocoa, bad management of public finances, over expenditure, over borrowing and a penchant to import all our needs as well as a reduced export base have worked against the cedi. A national debt of GH¢58 billion, soaring budget deficit and increased expenditure have also compounded the problem.
The cedi, each year, slides against the major international currencies due to the structural problem of more imports and less export but this year the slide and the pain is palpable.
What should be done ? A way should be found to curb the strong apetite of Ghanaians for imported goods. This is indeed a nation of storekeepers.
A broadened tax base and efforts to export more plus the incoming Euro bond, the cocoa syndication loan and the renewed tango with the IMF can hopefully stabilise things for the short term but after that, there is the need for a long-term solution to the annual depreciation of the cedi.
The Komenda Sugar Factory, when operational, can help to reduce the import bill. Another way is to look at the huge import of rice and do something about it in the long term.