THE FALLING VALUE OF THE CEDI AND SPIRITUALITY ---------------------------------------------------------------------- In as much as I trust that everything on earth has spiritual connotations and must be prayed for, I wish the prayer by my Archbishop Duncan William concerning the value of the Ghana Cedi were done in the closet for the following reason. Reason: The citizens of Ghana have a role to play in bringing down the high exchange rate of the cedi, and it is important that they appreciate the actual causes and the issues surrounding the value of our currency. So when the issues are simply reduced to spirituality, it would become difficult for us to take advantage of the national curiosity to educate ourselves even when God has played his part. Facts: When it comes to the exchange rate, the US Dollar or any foreign currency is like any other commodity (tomato) on the market: the higher the demand without a commensurate higher supply, the higher the price. The more we as a people buy almost everything from foreign countries and those countries buy little of our products, the more our currency (the cedi) is vulnerable. What it means is that more of our cedi chase the fewer dollars and or pound sterlings etc in the economy. Solutions: There are two approaches to solving the problem. 1. Demand side: Cut down on the demand for foreign currency. Here it must be emphasised that the demand is a factor of the behaviour of the Ghanaian households in general, so the only tool available to government in the short-run is to increase tariffs on selected items preferably those that would not affect the basic needs of the people (we cannot place a ban on any import without incurring a reprisal action from other countries and the wrath of the WTO). In this case, the punitive tariff must be understood by all of us that it is meant to resolve the problem of increased prices of essential goods and services in the economy and not to raise revenue for government. When this distinction is made, no political adventurist would succeed in rallying the ordinary people unto the street to demonstrate and cause mayhem because the middle to upper class people can no longer buy their second, third, fourth etc cars without paying a higher premium (duty). This is what gives a government the political will and strength to implement the so call hard decisions that inure to the long term benefit of the people. 2. Supply Side: Make efforts to increase the supply and export of such goods that our country has comparative and competitive advantage. This is a long term solution which very government would consider in the context of their political mandate. It means that since in a multiparty democracy, a political party must stay long enough in power to be able to implement and accomplish all its good intensions and plans, it is imperative that the citizens who vote must understand the long term effects of such policies to encourage governments to take bold initiatives even if the result would not manifest within the first or second term in office. Obstacles: The gullibility of our people and the demagoguery of our political leaders are the road blocks to achieving a faster development for a developing country like Ghana in a global world where the taste of the citizens are changing faster than their own economy could accommodate. Today, there is a news item that Ghana has achieved about 28 million mobile phone penetration with a population size of about 24 million. This implies that whilst we are unable to produce even the batteries of the handsets we use in our country, the average Ghanaian is using two or more handsets with two or more mobile networks connected. We can imagine the number of cars that have been imported by individuals and registered by the DVLA just a month ago in 2014. Yet, when this cause increased demand for crude oil and consequently for foreign exchange and eventually increase in fuel price, those who use these private cars make the loudest noise and succeed in pushing the poor man on the street who is always walking to every destination to start demonstrating because of high fuel prices. As a people, we can never eat our cake and have it. We must take interest in understanding the economic issues dispassionately and educate others about them so we can collectively make specific choices whilst we face the associated difficulties in anticipation of a Better Ghana in the future.
Posted on: Mon, 03 Feb 2014 04:05:53 +0000
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