Let’s devalue the cedi – Kenneth Thompson

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Asempa 8 years ago

Why devalue the cedi when you claim it will devalue its self? Our economy is too small for devaluation to have an impact. That gimick was tried by Rawlings. Devaluation favors countries like China with a huge economies and po ...
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Why devalue the cedi when you claim it will devalue its self? Our economy is too small for devaluation to have an impact. That gimick was tried by Rawlings. Devaluation favors countries like China with a huge economies and positive trade balances. The best solution for us is sound economic management and fiscal policies, not cosmetics like devaluation.
DIAMOND 8 years ago

Baloney!
You want to pay 10 cedis, 10,000 or 100,000 cedis for a dollar?

Haven't we suffered enough from devaluation, especially INTENTIONAL, ARTIFICIAL devaluation?

What do you produce in a quick turn-around that the ...
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Baloney!
You want to pay 10 cedis, 10,000 or 100,000 cedis for a dollar?

Haven't we suffered enough from devaluation, especially INTENTIONAL, ARTIFICIAL devaluation?

What do you produce in a quick turn-around that the world really needs?

How elastic are the supplies of your cocoa and coffee?

Or you think kenkey and shitor exports can compete with what the world really wants from China, Europe and the U.S.?

Let the foreign-currency market do its work. Don't interfere.
Clueless 8 years ago

Ghana is not even in control of the products it exports. Ghana imports rice, potato, chicken and issues bonds (borrowing money) at 22%-to-25% yields, all recipes for economic meltdown.

The road to stability will be painf ...
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Ghana is not even in control of the products it exports. Ghana imports rice, potato, chicken and issues bonds (borrowing money) at 22%-to-25% yields, all recipes for economic meltdown.

The road to stability will be painful and we need someone who understands that manufacturing for home consumption and export are the only ways Ghana can dig itself out of the hole.

Akuffo Addo is talking about free education and manufacturing, let's give the man a chance.

Mahama said Ghana can't afford free high school education, meaning he doesn't understand that the more educated the population, the larger the tax base.

I do not belong to any political party. I just want Ghana to move forward in the 21st century.

Don't devaluation the cedis please.

You devalue your currency only if you have more to sell to the outside world.

We are not using our comparative advantage over other nations with regards to processing our raw materials.
Asea Ho 8 years ago

You just don't understand the math and logic. Let me simplify it for you. I entered a shop on Spintex to buy a shoe. The price is GHC700.00 (quality locally made shoe). I quickly converted the cedis to US$ using an exchange r ...
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You just don't understand the math and logic. Let me simplify it for you. I entered a shop on Spintex to buy a shoe. The price is GHC700.00 (quality locally made shoe). I quickly converted the cedis to US$ using an exchange rate of GHC4-US$1. That gave me a US$ price at US$175. I checked online and the price of shoes (same quality) in the same quality range in shops like Macy's, Value City, Rugged Ware House and Payless, rage from UD$50-US$60. What do you think was my reaction? I rushed to the forex, changed my cedis to US$ and send it to a friend to get me two shoes and mail them to me. He got the two shoes for US$110 and mailed it express for US$25. I still have a change of US$40 (GHC160). Does this make sense to you. Do you understand the impart of this on our foreign exchange that we need so badly to import essential equipment.

Now lets use Mr. Thompson's logic. Assuming the exchange rate realistically shoots up to GHC10-US$1 by February 1, 2016. My GHC700 will give me US$70. Bearing in mind that prices in the US does not change astronomically as in Ghana. Give or take let assume the Price of the shoe in the US has moved to US$60. So my US$70 will get me a shoe with US$10 change. I will need additional US$15 for the shipment. In a sense the shoe cost me US$85 (GHC850). So in Mr. Thompson's math and logic it is economically wise for me to buy the shoe in Ghana. No siphoning of foreign exchange.

The rippling effect Goods in Ghana will be cheaper to tourist and the tourist industries will boom (inflow of foreign exchange) local producers will compete with foreign market. The import crazy economy will change to "domesticated" and export economy. The dollar will depreciate against the cedi. We will have a higher per capital income and low inflation rate. Life will be easy.

The government must listen to Mr. Thompson.
Bibini 8 years ago

Brilliant! There are just a few flaws in your logic: You forget that the local shoe manufacturer imports most, if not all the equipment, and materials needed to make the shoes. Factor that into it, and the price of the shoe c ...
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Brilliant! There are just a few flaws in your logic: You forget that the local shoe manufacturer imports most, if not all the equipment, and materials needed to make the shoes. Factor that into it, and the price of the shoe certainly does not stay at GHC700. Rethink the issue.
atongo 8 years ago

and how many shoes do we produce in Ghana? where do they get the leather from? you devalue your currency to get economic advantage... When you have industries blossoming. that is why the US will complain if China wants to dev ...
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and how many shoes do we produce in Ghana? where do they get the leather from? you devalue your currency to get economic advantage... When you have industries blossoming. that is why the US will complain if China wants to devalue. going by your shoe analysis, I can tell you the price of the shoe will double. why. because electricity tariffs will increase and the price of leather will increase. you are back to square one
KONKONSA 8 years ago

You really just running around in a circle - circular argument! The point you forget to note is that the said quality locally manufactured shoes you sought to purchase has 75% foreign/imported materials cost in its price bu ...
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You really just running around in a circle - circular argument! The point you forget to note is that the said quality locally manufactured shoes you sought to purchase has 75% foreign/imported materials cost in its price build up.
If we were to devalue the cedi to whatever levels and some locally produced items were to reduce in price in comparison to their foreign ones, like you alluded to, the demand for those items in turn will increase triggering an increment in the price too - basic rule of Demand and Supply.
The sensible way out is to have a skilled labour force that adds true value to our local products. This is achieved through technical training through the classrooms but more importantly on the production floor.
In addition the government must find a way to protect its own by finding clever ways to reduce the overall cost bill of locally made goods by reducing or totally eliminating any taxes whatsoever including customs payment on the small percentage of foreign materials needed to augment production. On the other hand the last thing to do is to sign an agreement like the EPA. The truth is that for a country like ours it will sound a death knell to our manufacturing economy which we desperately need to develop -Never mind any academic baloney that accompanies the EPA.
In the absence of the above any artificial price adjustments will have no meaningful long term impact.
You will be caught in a catch-22.
Don't forget we are rational consumers and our money goes where we get value. Patriotism is non existent in market economicshare.
The Lawless Law Criminal, Jay Allen 8 years ago

Good analysis Asea Ho, but you forgot to include that we import more and export less, and import the raw materials to make the shoes. when the cedi is devalued, interest payments on foreign loans will balloon, because we will ...
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Good analysis Asea Ho, but you forgot to include that we import more and export less, and import the raw materials to make the shoes. when the cedi is devalued, interest payments on foreign loans will balloon, because we will need so much Cedis to pay for one Dollar debt. Ghanaians must understand that industrialization or manufacturing economy is linked with local farmers who produce the raw materials. when you manufacture with local materials, you are in a position to compete. Our chew pour pass and forget educational mentality is probably the issue. Linking process to achieve results has eluded us. We need to rethink, because the prospects are there to achieve this. If you import cotton the main raw material for textile, it is hard to compete with someone getting it locally. Assist producers of your main source of material with advice of what you want , how you want with guaranteed prices etc. for a win win situation.
AMB 8 years ago

Kenneth is there any need for an official devaluation? We are operating in a free market economy with the forces of supply and demand determining the exchange rate. An official devaluation is therefore not necessary.

Kenneth is there any need for an official devaluation? We are operating in a free market economy with the forces of supply and demand determining the exchange rate. An official devaluation is therefore not necessary.
Atongo 8 years ago

What are we going to export to gain an advantage. Devaluation does not serve us any good. We are an import dependent . How useful is this when you import raw materials for your industries. This is book economics.

What are we going to export to gain an advantage. Devaluation does not serve us any good. We are an import dependent . How useful is this when you import raw materials for your industries. This is book economics.
United Ghana 8 years ago

Thank you, Atongo. All we'll end up doing is devaluing year after year. What matters is the fundamentals of the economy. We need to develop our productive capacity to enable a significant increase in exports.

Thank you, Atongo. All we'll end up doing is devaluing year after year. What matters is the fundamentals of the economy. We need to develop our productive capacity to enable a significant increase in exports.
Bobby 8 years ago

You are on point, Atongo. Though am not an economist am not able to make sense of Kenneth Thompson is proposing. May be he (Kenneth)is yet to know 'balance of trade'. Kenneth should stand in front of the mirror when he is abo ...
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You are on point, Atongo. Though am not an economist am not able to make sense of Kenneth Thompson is proposing. May be he (Kenneth)is yet to know 'balance of trade'. Kenneth should stand in front of the mirror when he is about going to work;he will realize that almost everything he is wearing is imported.He can then appreciate the 'Ghanaian Economy'.
Saint Ghfuo: FREE YOUR PSYCHE 8 years ago

implement and institute property rights, a flat tax, make starting a business easy and also tie local national currencies to the euro or the dollar. This will ensure trust and security in soliciting foreign investments as inv ...
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implement and institute property rights, a flat tax, make starting a business easy and also tie local national currencies to the euro or the dollar. This will ensure trust and security in soliciting foreign investments as investors will be more confident creating wealth with a level of security. Knowing very well that reforms and structures are in place to curb and avoid hyperinflation.
DIAMOND 8 years ago

I think we should just adopt the dollar like Liberia and Zimbabwe and deal with the price differentials on the ground (in the U.S. stores versus Ghana's stores) rather than dying of excessive stress because of the unpredictab ...
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I think we should just adopt the dollar like Liberia and Zimbabwe and deal with the price differentials on the ground (in the U.S. stores versus Ghana's stores) rather than dying of excessive stress because of the unpredictability and thus the shockwaves of the always-against-us exchange rate the next day, week, month or year.

The thieves pay themselves in dollars. Why not the rest?
Foreigner 8 years ago

There is a flaw in your argument. The question is....How does the shoe get made? What are the input costs to that shoe?

Machines are required to make the shoe. No one makes them in Ghana so it needs to be imported. The ...
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There is a flaw in your argument. The question is....How does the shoe get made? What are the input costs to that shoe?

Machines are required to make the shoe. No one makes them in Ghana so it needs to be imported. The leather (or plastic components)...where will they be made? They are at least parts need to be imported or the raw materials. That shoe that is selling for 700 ghana cedis will need to sell for 1,700 ghana cedis. You won't be further ahead.

Look at everything in ghana. Farmers. Seeds may be purchased locally but how about fertilizer? The machines required to automate and improve effeciencies....where are they made? When you look at it, most inputs will be imports.

The BEST thing for the government to do with business is to pick an exchange rate they believe is 'correct' and can be supported through occasssional cash infusion via the bank of ghana. Businesses HATE uncertainty. The cedi depreciating at a huge rate up to the end of June '15 and then in just 3 weeks, reversing almost entirely is NOT a good thing. Keep it at 3.8....3.9....whatever rate...but keep it consistent. That is the best thing for the cedi, businesses, and the country.
Saint Ghfuo: FREE YOUR PSYCHE 8 years ago

NO, DONT THROW AWAY THE CEDI. WE MUST MIANTAIN OUR CURRENCY. JUST TIE THE CEDI TO THE EURO OR DOLLAR. U CAN EVEN TIE IT TO THE CDN DOLLAR OR AUSSIE DOLLAR. N THEN CREATE JOBS AND MAKE IT EASY FOR PPL TO OPEN BUSINESSES N PROT ...
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NO, DONT THROW AWAY THE CEDI. WE MUST MIANTAIN OUR CURRENCY. JUST TIE THE CEDI TO THE EURO OR DOLLAR. U CAN EVEN TIE IT TO THE CDN DOLLAR OR AUSSIE DOLLAR. N THEN CREATE JOBS AND MAKE IT EASY FOR PPL TO OPEN BUSINESSES N PROTECT PROPERTY RIGHTS AND RATES. THESE WILL CREATE JOBS, STIMULATE THE ECONOMY, ENCOURAGE SPENDING N ALLOW INVESTORS TO BELIEVE THAT IF THEY INVEST IN GH STOCKS N BONDS. THEIR MONEY WILL NOT BE LOST/REDUCED DUE TO INFLATION. DO U UNDERSTAND ECONOMICS?.
lankwei 8 years ago

Simplistic balderdash!

Simplistic balderdash!
BL 8 years ago

Exactly

Exactly
KOO 8 years ago

This man thinks devaluing the Cedi will solve Ghana,s problems.It will only deteriorate the already sad economic situation of the Ghanaian.Where are the products to export when our factories are folding up?.

This man thinks devaluing the Cedi will solve Ghana,s problems.It will only deteriorate the already sad economic situation of the Ghanaian.Where are the products to export when our factories are folding up?.
Zero enforcement 8 years ago

This guy OBVIOUSLY isn't a businessman..

This guy OBVIOUSLY isn't a businessman..
v.bowe 8 years ago

Can't agree any further with you.My elementary economics teacher taught me that devaluation works for countries with high production base.What do we produce here in Ghana? This man certainly wants to melt a little dollars to ...
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Can't agree any further with you.My elementary economics teacher taught me that devaluation works for countries with high production base.What do we produce here in Ghana? This man certainly wants to melt a little dollars to pay a lot of his workers whilst he enjoys windfalls from international transactions. LOL!
Asea Ho 8 years ago

The problem with us is that economic policies are shaped around the elites taste for imported goods that require foreign exchange to go "koto beton."

The government should come up with policies that will encourage and enh ...
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The problem with us is that economic policies are shaped around the elites taste for imported goods that require foreign exchange to go "koto beton."

The government should come up with policies that will encourage and enhance locally manufacturing business.
ROGUE LAWYER 8 years ago

stop interviewing Bankers as economics what sense does this make to the solution basket ?
A country which imported more than exporting how could devaluation of her currency wipe the wounds?

The issue is government must ...
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stop interviewing Bankers as economics what sense does this make to the solution basket ?
A country which imported more than exporting how could devaluation of her currency wipe the wounds?

The issue is government must cut down her expenditure, reduce the size of the government, slash off some boards of directors and their benefits because they are all white elephants, to cut her coat according to her size . what do you gained if you borrow to pay debt , eat, and pay salaries?
we need to change our system of governance ,a country like Ghana with such a small economical based factor do we need over 200 MPs,- we must go federal and hire small quality and competent people to manage the country

Kenneth economical ideas is the same as Seth Terkpe, when such type of thinkers rule the country the economy becomes national Desaster of chaos and corruption gains trunk roots to collapse the hard worn achievements.
is seth Terkpe building a national economy or he think he is just managing an over swallowed debt company who was engaging apampem buy & sell store ?
Asea Ho 8 years ago

In a country where those who speak the truth become prey, I congratulate the grandson/son of women of integrity for being bold to puff the truth. However, I find him too diplomatic (that is his nature) and academic. What it s ...
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In a country where those who speak the truth become prey, I congratulate the grandson/son of women of integrity for being bold to puff the truth. However, I find him too diplomatic (that is his nature) and academic. What it said requires an academic brain to evaluate our current financial situation. Three points stand out clear in what KKBT said:

1. That the revaluation of the cedi under the Kuffour led NPP regime was financially a bad move and the genesis of the inflation problem today. We are still quoting prices in millions.

2. That NDC is suppressing the free fall (devaluation) of the Cedi for political gains.

3. That Bawumiah and his NPP know that devaluation is the solution, hence the deceiptive exchange rate politics.
Asea Ho 8 years ago

Yet under Rawlings goods were cheap and businesses flourished. The problem started when Kuffour deceptively reevaluated the Cedi.

Yet under Rawlings goods were cheap and businesses flourished. The problem started when Kuffour deceptively reevaluated the Cedi.
Akosua 8 years ago

You have everything reversed. Under Rawlings no one had money, he seized all the money. Ghana only started to flourish under Kuffour.

You have everything reversed. Under Rawlings no one had money, he seized all the money. Ghana only started to flourish under Kuffour.
Ametsitsi 8 years ago

Kenneth Thompson, I am sorry your economics is warped! Go back and come again latter with corrections!

Kenneth Thompson, I am sorry your economics is warped! Go back and come again latter with corrections!
F.W De-Clerk 8 years ago

I am struggling to figure out where this idiot got this dangerously outdated logic from? Reminiscent of a possessed mad idiot, he has been constantly running amok with the idea. Every idiot that has successfully run a village ...
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I am struggling to figure out where this idiot got this dangerously outdated logic from? Reminiscent of a possessed mad idiot, he has been constantly running amok with the idea. Every idiot that has successfully run a village business feels that he knows something. From Trump to Ayariga, and now this idiot without any sound economics background is calling for devaluation of my CEDI.
Aprukusu 8 years ago

This man must be a voodoo economist.

This man must be a voodoo economist.

Let’s devalue the cedi – Kenneth Thompson

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