Business News of 2014-01-31

Comment: Free fall of cedi very worrying

The local currency, the cedi, is experiencing a free fall reminiscent of the late 1990s when the prices of goods and services could change while bargaining was going on because of the uncertainties surrounding the value of the cedi against the foreign currencies.
Towards the end of last year and at the beginning of this year, the cedi has been experiencing a free fall, compounding the cost of doing business in the country.
The perennial fall of the cedi is not strange in our economy that depends on the importation of every conceivable merchandise, including toothpick, peanuts, used clothing, electrical parts and even furniture into the country which was once a net exporter of lumber.
The value of the cedi is said to have been at an all-time low against all the major currencies in the last four years because every businessman or woman goes to the forex market with the cedi to transact business.
Can we ever halt the free fall of the cedi when all of us have developed an uncontrollable taste for anything foreign, even when there are local brands with higher quality?
Many economists and industrialists have raised concern over the unbridled liberalisation of the economy, without anybody paying attention to the effects, especially from the neo-liberal theorists who have cautioned against protectionism because there is a prize to pay for it.
Certainly, there is an extra cost to be borne if we decide to protect local industries and give them preferential treatment, but it will be a necessary evil if we have to protect our local economy.
We must engage in discussions over who bears the extra cost of protectionism because what that policy entails is that we may have to impose extra tariffs on some imported items in order to protect local businesses.
The Daily Graphic believes that there is no need to invent the wheel, as there are useful lessons that we can learn from our engagement with the international community, including donors and investors.
The country is at the crossroads as far as the health of the economy is concerned, especially with the cedi.
It is a matter of serious concern to businesses, individuals and the government because usually in the first quarter of the year the local currency is not under pressure.
The Daily Graphic thinks the Economic Management Team, led by the Vice-President, ought to interrogate the issues and devise measures to arrest the free fall of the cedi in order to restore the economy to the stage of growth and transformation.
We have talked about creating the enabling environment for doing business in the country and yet the business community continues to complain about the cost of doing business.
The Daily Graphic thinks that the government should take bold steps to arrest the free fall of the cedi and also look at the structural defects in the economic architecture in order to assure all of a better future of affordable cost of living.