Business News of Tuesday, 17 February 2015
Source: Daily Guide
Kenneth Thompson, the Chief Executive Officer (CEO) of Dalex Finance Limited, a leading financial institution in the country, has asked government to, as a matter of urgency, stop overvaluing the local currency, the Ghanaian Cedi.
According to Mr. Thompson, overvaluing the cedi has aggravated Ghana’s economic crisis.
“The overvalued cedi has completely distorted the incentive scheme that underpins economic and business decisions and therefore has aggravated our economic problems,” he stated.
Mr. Thompson, a seasoned accountant disclosed this while making a presentation under the theme: Crystal Ball Gazing: The Ghanaian Economy in 2015” at a public lecture organized by the Chartered Institute of Marketing Ghana (CIMG) on Wednesday in Accra.
The Ghana cedi in 2014 lost about 40 percent of its value to major foreign currencies like US Dollar, the British Pound, the CFA Franc and the Euro.
The Bank of Ghana (BoG), in an attempt to halt the free fall of the cedi, took several drastic measures which led to further depreciation of the currency, with its dire economic consequences on the domestic market.
He indicated that government was spending excessively, a trend he claimed was unhealthy for the survival and progress of the local economy.
He said “we spend 43 percent of our income paying public servants who are less than 10 percent of our population. We continue to spend over 70 percent of our revenue servicing debt and on the Single Spine Salary Structure.”
Government’s spending over the years has been mostly targeted at consumption projects in the form of payment of salaries for civil servants and not really towards productive causes like the provision of social services namely quality healthcare, education, among others that seek to improve the livelihoods of the masses.
Commenting on the country’s economic prospects for 2015, he noted emphatically that the economic crisis would worsen this year, saying Ghana’s economy is heading for a crash.
“We are heading for a crash…we have got to strive for operational efficiency because we are extremely wasteful in this country. The financial indiscipline that is collapsing the economy will continue this year,” Mr. Thompson said.
The Dalex boss warned banks and other allied businesses across the country to adopt what he described as operational efficiency in order to survive the massive economic storm that is about to befall the country.
“Strive for operational efficiencies in your business, Mr. Thompson urged, and noting that “Access to finance will continue to be expensive and difficult to get.”
“Be conservative about your forecast for growth in your business. Do not be swayed by the euphoria in Q1 when the IMF bailout deal is signed.”