The depreciation in the value of the Ghanaian Cedi has greatly affected the economy, causing labour disputes, the failure of some businesses, and the relocation of others to more business-friendly countries.
In its 2024 Mid-Year Budget Review, titled: ‘A Critical Assessment of the 2024 Mid-Year Budget by ISSER’, the Institute of Statistical, Social and Economic Research (ISSER) said the Ghanaian Cedi has experienced significant depreciation.
In the first half of 2024, the Cedi fell by 18.6% against the US dollar, 17.9% against the Pound Sterling, and 16.0% against the Euro.
This follows a steeper decline in 2023, with the Cedi dropping 27.8% against the US dollar, 31.9% against the Pound Sterling, and 30.3% against the Euro.
In 2022, the depreciation was 30.0% against the US dollar, 21.2% against the Pound Sterling, and 25.3% against the Euro.
These figures indicate some stabilization in the exchange rate over the past three years, although the Cedi was more volatile in the first half of 2024 compared to the same period in 2023.
ISSER noted, “It must be reiterated that the high exchange rate in Ghana has partly contributed to labour agitations, high cost of doing business, and the collapse of some businesses while others relocated to more business-friendly countries.”
The challenging economic conditions in Ghana from 2022 to date have forced many multinational companies to move part or all of their operations abroad.
The latest company to announce its departure is the food delivery giant Glovo.
On May 10, 2024, the Spanish firm revealed it was leaving the Ghanaian market due to profitability issues and a shift in investment priorities.
This move affects the many jobs the company provides to young Ghanaians and the country’s Gross Domestic Product (GDP).
The report calls for urgent government intervention to curb the rate of depreciation against major trading currencies and to boost exports to reduce the demand for trade forex.
ISSER recommends, “The recent policies by the central bank to enforce the forex regulations, in addition to having increased presence on the exchange rate market, should be intensified.”
ISSER’s assessment underscores the need for robust economic policies to address the adverse effects of currency depreciation.
It further noted that reducing exchange rate volatility is crucial for creating a stable business environment, attracting investment, and easing economic pressures that can cause labour disputes and business relocations.
