Chief Executive Officer (CEO) of the Ghana Chamber of Commerce and Industry, has voiced concerns over the prevailing foreign exchange rate and its effects on businesses.
During his appearance on Joy News’ PM Express Business Edition on September 26, he emphasized that despite the cedi showing some level of stability, the exchange rate remains notably high, significantly impacting businesses, especially those involved in import activities across the nation.
“Despite the stability, the rate is still relatively high. A year ago, we were looking at around ¢10 to the dollar. Now it’s between ¢15 and ¢16.80. If you’re importing or dealing in foreign currency, the impact is obvious,” he stated.
Mr. Badu-Aboagye emphasized that numerous manufacturing firms in Ghana are heavily dependent on imported raw materials, and the weakening of the cedi significantly increases the cost of their operations.
The Cedi’s severe depreciation against major trading currencies is severely impacting businesses, according to Dr. Mark Badu-Aboagye, Chief Executive Officer (CEO) of the Chamber of Commerce.
“This is certainly not a good time for businesses in Ghana due to the free fall of the cedi,” Dr. Badu-Aboagye stated during his appearance on the Ghana Tonight show on TV3 on Thursday, May 16.
The Cedi is experiencing a record-breaking weakening cycle, having failed to gain against the dollar in the past 22 trading sessions, the longest streak since Bloomberg began tracking the data in 1994. By 1 p.m. in London, the Cedi had weakened by 0.3%, trading at 13.9310 per dollar.
This year, the Cedi has slumped by 14%, only surpassed by currencies that have undergone devaluation, such as the Egyptian pound and Nigerian naira.
The decline has been exacerbated by a significant drop in cocoa earnings, with exports plummeting by nearly a third to $508 million in the first two months of the year due to adverse weather, disease, and fertilizer shortages.
Despite a temporary surplus in 2023, Ghana’s long-standing current account deficit is reemerging, posing further challenges for the Cedi, noted Gergely Urmossy, an emerging market strategist at Societe Generale.
Forecasts indicate the Cedi will breach its record low of 14.6174 per dollar by the third quarter, potentially ending the year at 15.98. FX forward pricing is calculated based on the spot rate and the interest rate differentials between the two currencies for the tenor of the forward.
Amid the currency’s poor performance, Kojo Yankah, a former Minister of State under the Rawlings administration, has urged the government to prioritize providing incentives for businesses to boost production rather than imposing additional taxes. Yankah argued that taxing businesses during this period of currency instability is suffocating the business community.
Secretary-General of the International Chamber of Commerce (ICC), John Denton, has said that the organization has placed a high priority on helping small and medium-sized businesses (SMEs) across the continent make the most of the African Continental Free Trade Area (AfCFTA).
Mr Denton, speaking to the B&FT in Accra during an official working visit to Ghana and sub-Saharan Africa, said the Chamber is working with its ICC Regional Centres of Enterpreneurship (CoEs) on the continent to prioritise and prepare SMEs to harness greater participation in the AfCFTA with emphasis on promoting cross-border trade.
With four centres of entrepreneurship across Africa, in countries including Ghana, Nigeria, Kenya and Morocco, the Chamber according to Denton, will lay major emphasis on open innovations for SMEs and take keen interest in women-led businesses.
Already, the ICC has built capacity for several women-led businesses in Africa with recent programmes, partnering UPS, Tralac and West Blue Consulting. The Chamber also hosted an open innovation for several startups in Nigeria, Kenya and the World Food Programme innovation accelerator in East Africa.
The ICC, Mr Denton said, is very focused on growing the private sector by supporting entrepreneurship particularly in sub-Saharan Africa as its CoE seeks to strengthen and further expand the Chamber’s extensive global network that currently comprises 6.5 million enterprises in over 130 countries.
“Apart from these inroads, the Chamber is also driving ecosystem partnerships with public and private actors including United Nations Economic Commission for Africa, United Nations Development Programme and development agencies such as USAID and GIZ” Mr Denton noted.
Addressing Mr Denton during a courtesy call, Minister of Trade and Industry in Charge of Small and Medium Enterprises (SMEs), Dr. Stephen Amoah, said Ghana has budding entrepreneurs with the potential to grow the nation’s economy but will need to be exposed to the required capital and ideas in order to be able to scale up and be competitive.
The ICC Secretary-General visited the Minister with his team from the renowned Global Association of Businesses, including Ghana’s former Attorney General, Marieta Brew Appiah who is a member of the ICC’ Arbitration Court and Doni Kwame, the Secretary-General of ICC Ghana.
Mr. Denton noted that the ICC has enjoyed a close working relationship with the Ministry of Trade and Industry through its Ghana National Chapter since the Chamber was launched in the country.
He said the ICC Ghana has led the organized private sector to advocate for the ratification of the World Trade Organisation Trade (WTO) Facilitation Agreement in Ghana and followed up with its implementation with the support of the Global Alliance for Trade Facilitation, an activity which, he asserted, is still ongoing for the National Trade Facilitation Committee.
He revealed that the ICC is currently advocating the extension of the WTO Moratorium on custom duties on Electronic Transmission and is therefore ready to engage government on that and also provide support or capacity building on international best practice on the calculation of VAT which has been a source of concern for ICC members globally.
Marietta Brew Appiah who is Ghana’s representative at the ICC’s International Court of Arbitration, briefed the deputy Minister on the works of the Court.
The world’s richest businessman recently virtually attended the B20, a business gathering that takes place concurrently with the G20.
Musk has had an interest in Indonesia for some time – ostensibly to invest in nickel mines here that would come in handy for his electric vehicle business.
Musk, dressed in a bright green batik shirt, appeared via video link.
Perhaps a physical visit would have been a distraction because of what’s going on with his ownership of Twitter, so are the Indonesians really all that disappointed?
When I mentioned the notable absence to Arsjad Rasjid, host of the B20 and the head of the Indonesian Chamber of Commerce, he jokingly asked – “Who?”, and then seemed to downplay his absence.
“Of course, we are disappointed,” he told me on the sidelines of the summit. “He is an investor, I hope he invests in Indonesia. But there’s a lot of other investors who are here you know, from many countries.”
