By Maxwell Nkansah
The Ghana Union of Traders Association (GUTA) has said their businesses are collapsing in the country. According to the association, the situation is a result of the current skyrocketing exchange rate.
“We want to call the attention of the government to the fact that the depreciation of the cedi against other major trading currencies is getting out of hand, and the increase in the monetary policy rate is also leading to high lending rates in the country.”
“Businesses have reached a situation where their survival is seriously threatened if no immediate action is taken by the government to find a solution,” the President of the Association, Joseph Obeng, narrated in a press statement.
He continued, “By this statement, we are calling on the government, as a matter of urgency, to reconvene the Foreign Exchange Committee that was set up a few years ago by the Finance Ministry, which involved all relevant stakeholders, to help find an immediate solution.”
Below is the full statement.
Businesses are bleeding to death.
As a result of the current exchange rate situation in the country, businesses are seriously bleeding to death.
The government, therefore, needs to do something to salvage the situation as soon as possible.
We want to call the attention of the government to the fact that the depreciation of the cedi against other major trading currencies is getting out of hand, and the increase in the monetary policy rate is also leading to high lending rates in the country.
Businesses have reached a situation where their survival is seriously threatened if no immediate action is taken by the government to find a solution.
With this statement, we are calling on the government to reconvene the Foreign Exchange Committee that was set up a few years ago by the Finance Ministry, which involved all relevant stakeholders, to help find an immediate solution.
It could be recalled that since December 2021, when the dollar was at 6.4 cedis, our working capital has been depleted by 40%. Now that the dollar has reached about 9.00 cedis, our worst fear is that we are now going to receive Christmas orders from our suppliers, which may aggravate the situation.
If immediate remedial measures are not taken to control this alarming situation, we may be using one million Ghana cedis to buy only one hundred thousand US dollars when the dollar reaches 10.00 Ghana cedis.
At this point in time, if nothing is done, speculation would be rife and serious panic would set in for people to invest in forex as a matter of security for their hard-earned working capital, thereby making control of such a situation difficult for the government.
We recognize that excessive importation is one of the major causes.
Here we think that the government has failed to take due advantage of our national investment laws, especially on foreign retail trade and wholesale, to tighten imports.
Allowing foreigners into the retail trade and wholesale sectors of the economy will not help this country, but rather defeat the action plan set for the implementation of 1D1F, AfCFTA and general industrialization in Ghana.
We also want to remind the government that the big-time institutional importers, especially those who serve as conduits for dumping goods mainly from China, are the culprits.
Small and medium-scale importers like GUTA members import only 15% of the whole volume of imports into the country.
For the locals, the import business has become gloomy and pathetic as the multinationals have taken over. We have started looking for goods to export to support the economy and be able to sustain our businesses, but the same cannot be said of these foreigners.
We, therefore, suggest that since they do not bring in physical cash to invest in but rather resort to dumping and repatriating our hard-earned foreign exchange as a country, the investment law should be amended to make them deposit their capital fund here in Ghana to make their transfers.
Most of these foreigners come under the guise of manufacturing but end up trading; by taking advantage of legal loopholes and a lack of enforcement, they harm our economy.
The juiciest parts of our economy, such as banking, telecommunication, oil, mining, and the extractive industries, are all dominated by foreigners who repatriate all their profits to their home countries, leaving us with virtually nothing except a few taxes and some royalties.
We herein suggest that the government should devise an effective method to schedule this repatriation in a staggered manner over a reasonable period, apart from revising the investment law to ensure that investments in all these profitable and juicy areas have some reasonable equity for retention in Ghana rather than the current situation where these companies consume all our foreign exchange earnings.
To our detriment, most foreign direct investors overpriced their investments in order to have an advantage in repatriating the same value to their home countries. This explains the reason we hardly physically see these investments corresponding with the amounts that are being declared as foreign direct investments in the country.
Over-dependence on foreign services such as health care, education, and others by Ghanaians is also to blame for this problem. The movement and transfer of money by churches should also be closely monitored and controlled.
We believe that the government should have full control of the management of our national resources as well as the capability to solve this problem in the shortest possible time unless this rapid depreciation of the cedi is a deliberate plan by the government to devalue our national currency.
How can we go on like this as a nation? Because this is not just a simple matter of passing on the cost to the consuming public. The purchasing power of consumers is drastically reduced due to the high inflation rate and other factors.
As a result, consumers are not even buying at the moment, let alone increasing the prices. Businesses’ turnover is negatively affected, thereby rendering us unable to service our loans, especially for those whose capital is borrowed from commercial banks and other sources.
At this stage, the only prudent thing to do is to hold onto your stocks without selling, but the problem here is that you might be owing your suppliers and banks. At the same time, you cannot punish the general public.
The only option now is for the government to think outside the box and find a pragmatic solution to bring the economy back to its feet.
We agree that there is a problem in the world, and Ghana is no exception. This period is the best time to bring leadership skills to bear and make a difference, of course, with the support of all Ghanaians regardless of political leaning.
Businesses are indeed bleeding and are in dire need of emergency rescue.