Business News of Monday, 2 June 2014
A vigorous campaign to switch Ghana's taste for foreign goods to local consumption will save the battered cedi which has been declining against major world currencies, CEO of Dalex Finance has recommended.
"Why are we eating perfumed rice?..We are not entitled to it. We should start eating gari and kenkey...what's wrong with that?..." Ken Thompson recommended.
This assessment comes four months after the Bank of Ghana slapped fiscal measures to arrest the rapid depreciation of the cedi. The Bank directed that all transactions in the country should be conducted in Ghana cedis. It ordered foreign cash withdrawals over the counter shall only be permitted for travel purposes outside Ghana and shall not exceed US$10,000.00 or its equivalent in convertible foreign currency, per person, per travel.
In addition, no bank shall grant a foreign currency denominated loan or foreign currency linked facility to a customer who is not a foreign exchange earner. All exporters are to collect and repatriate in full, the proceeds of their exports to their local banks within 60 days of shipment.
Although the Bank maintains its measures have relatively stabilised the cedi, other players are not convinced. The cedi which sold at $2 at the start of the crisis is now selling at $3.
Speaking on Joy Fm's Super Morning Show on Monday, Mr. Thompson dismissed the measures saying "it has not worked..the least said about it the better".
"The reality is that the cedi will continue to fall. Where it will get to I don't know," he pointed out.
Diagnosing the cedi's depreciation, he said Ghanaians have acquired a certain taste for foreign goods and services which are purchased using dollars currently in short supply.
Drawing an analogy, he said Ghana's economy is like an alcoholic trying to abstain from his addictions. "Every now and then we get into a hole, we get a hangover," he said.
According to Mr. Thompson, government in the past tried to implement policies such as export promotion and import substitution which worked well until 2007.
"From 2007, we started to spend...people were spending on foreign travel..started taking their kids abroad..even imported labour for CAN 2008," he recalled.
With another crisis for Ghana's local currency, Thompson is recommending Ghana goes back to the thing we have done before.
He said Ghanaians have to tighten their belt by cutting down on consumption of foreign goods.
"Everybody has to look at his expenditure patterns and see where they can cut. We all drive SUVs. We are not entitled to SUVs. We have to earn it...get smaller cars, get out of your air-conditions...we have to encourage local consumption," he said.
His recommendations are not new, he said, because the solutions have been on the drawing board for the past 50 years.
Venting his frustration, he condemned government officials as lacking "a sense of urgency" who preferred to "talk and talk and talk".
He said Ghanaians will understand the sacrifices that have to be made because "we are not an aggressive people". It is, therefore, the responsibility of leadership to package a strategy and sell a vision to Ghanaians.