STORY: Roundup: Ghanaian businesses pressured by fast depreciating currency: experts
SHOOTING TIME: May 21, 24 and 27, 2024
DATELINE: May 31, 2024
LENGTH: 00:03:54
LOCATION: Accra
CATEGORY: ECONOMY

SHOTLIST:
1. various of Ghana Independence Square
2. various of Accra airport
3. various of Accra central business district
4. SOUNDBITE 1 (English): JOSEPH OBENG, President of the Ghana Union of Traders Associations (GUTA)
5. various of Accra central business district
6. SOUNDBITE 2 (English): JOSEPH OBENG, President of the Ghana Union of Traders Associations (GUTA)
7. various of Accra central business district
8. various of Accra airport
9. SOUNDBITE 3 (English): JOSEPH OBENG, President of the Ghana Union of Traders Associations (GUTA)
10. various of Accra central business district
11. SOUNDBITE 4 (English): SAMUEL BEDIAKO-ASANTE, Chief executive officer of Sambed Financial Services
12. various of Accra central business district
13. SOUNDBITE 5 (English): ERNEST ADDISON, Bank of Ghana Governor

STORYLINE:   

The continuous weakening of the local currency has put enormous pressure on businesses in Ghana, a trade association leader has said.

Joseph Obeng, president of the Ghana Union of Traders Associations (GUTA), representing small and large-scale importers, wholesale operators and retailers across the country, told Xinhua in a recent interview that the situation has caused traders to lose capital.

According to Ghana's central bank, the Ghanaian cedi has depreciated about 14.6 percent since the beginning of this year, with one U.S. dollar currently being exchanged for about 14 cedis.

SOUNDBITE 1 (English): JOSEPH OBENG, President of the Ghana Union of Traders Associations (GUTA)
"The depreciation is taking a chunk of our resources. For now, most businesses have suffered a loss of about 23 percent, which doesn't augur well for business, so the earlier we do something about it, the better."

He said the depreciation has caused wholesale prices of imported goods to surge. 

SOUNDBITE 2 (English): JOSEPH OBENG, President of the Ghana Union of Traders Associations (GUTA)
"One will see that if the prices of goods go up, why don't you pass it on to the final consumer? See, the final consumer also has his limit. If the prices of goods and services go up, they are unable to buy because their purchasing power has actually reduced because of the effect of inflation."

He partly attributed the forex crisis to speculation, with people who have no business in importation also buying U.S. dollars as a store of value. 

He added that many foreign companies repatriate their profits around this time, leading to high foreign exchange demand.

SOUNDBITE 3 (English): JOSEPH OBENG, President of the Ghana Union of Traders Associations (GUTA)
"Our investment law has it that everybody has the right to repatriate profit. And so at this time, all the companies who own the juiciest parts of the economy repatriate their money, and this is the situation we find ourselves. So I think it is about time we revisit our investment laws to make sure that we have some retention into our economy."

Obeng said that despite Ghana's attraction as an investment destination in Africa, the situation has deteriorated due to the impact of the COVID-19 pandemic. He noted that the crisis is also partly due to structural weaknesses: low manufacturing capacity in the country and the exportation of natural resources in their raw state in an import-dependent economy leads to constant high demand for foreign exchange to service supplier credits offshore.

He urged the government to take steps to address the depreciation of the cedi to reinject confidence in the economy in the short term while developing long-term solutions to deal with the structural deficiencies in the economy permanently.

Samuel Bediako-Asante, chief executive officer of Sambed Financial Services, a local business consultancy, told Xinhua that with the low productive capacity and high import culture, the country's balance of payments will always be in distress. The analyst said the fluctuation in the foreign exchange market creates uncertainties for businesses, making it difficult for them to plan on a medium- to long-term basis for their operations.

The situation also has dire consequences for foreign investors and foreign traders operating in Ghana, as it can cause losses if they do not increase their prices, he added.

SOUNDBITE 4 (English): SAMUEL BEDIAKO-ASANTE, Chief executive officer of Sambed Financial Services
"You are an importer. You have imported your items sold during Christmas (when the exchange rate was relatively stable), and then you are paying back. You need more of the cedi to pay back your dollars to your suppliers."

Bank of Ghana Governor Ernest Addison, at a press briefing on Monday, attributed the currency depreciation to higher imports, central government operations and speculation. However, Addison assured businesses of enough foreign exchange reserves at the central bank to meet their demands, with a buildup of more reserves since the country commenced the implementation of reforms last May.

SOUNDBITE 5 (English): ERNEST ADDISON, Bank of Ghana Governor
"The Bank has enough foreign exchange reserves to support the market, and economic agents should stop engaging in speculative purchases as they will suffer economic losses when the correction occurs."

Xinhua News Agency correspondents reporting from Accra.
(XHTV)