Business News of 2014-03-03

Gh¢5 to $1: That's true value of cedi - Dalex boss

Ghana’s economic woes will not end, unless the local cur­rency is allowed to depreci­ate to its rightful value, Chief Executive Officer (CEO) of Dalex Finance and Leasing Company, Mr Kenneth Kwamina Thompson has said.

The current value of the cedi to the United States (US) dollar, according to Mr Thompson, is far from its true value.

“The cedi will fall; it should be allowed to fall because any actions we take to stop the fall of the local cur­rency are only short term,” he said.

“The true value of the cedi may be GHc 5 to $1,” he stated.

Efforts by the Central Bank to stem the cedi’s depreciation will not suffice rather, they will worsen the situation, he said.

Blaming the cedi’s predicament on what he called Ghana’s addiction to foreign goods, Mr Thompson warned that “any attempt to combat our addic­tion to foreign goods and services using restrictions and bans is doomed to fail.”

Rather, the BoG will end up creat­ing a parallel market, and business wiH engage in all sorts of underground ac­tivities which will compound the al­ready bad situation.

Mr Thompson was delivering a lec­ture organised by the Chartered Insti­tute of Marketing, Ghana (CIMG) in Accra last Thursday.

Speaking on the topic ‘In a Volatile Economy, Fortes fortuna Adiuvat’, Mr Thompson likened Ghana’s economy to an alcoholic who is addicted to “Apio or vodka.”

Explaining the evidence of an ad­diction to foreign goods, the Dalex boss revealed that the cedi had be­tween 1998 and 2006 depreciated by 309% while between 1998 and 2014 the currency had fallen by 963%.

He expressed disappointment over the fact that “whereas other countries are trying to devalue their currency to make their exports cheaper, we seem to take pride in keeping it at an artifi­cial level which is unsustainable.”

“If the cedi falls, our exports be­come cheaper, so technically we can sell more and help create job opportu­nities for the teeming unemployed youth,” he maintained.

The market, according to him, will always win.

Mr Thompson recommended a re­turn to some of the best economic policies taken in the past, pointing out that those simple polices worked per­fectly to place Ghana on a right foot­ing.

“There are a number of things that we did in the past that we have to look at again. We have to do import substi­tution, export promotion and we should give incentives to our own peo­ple to grow their businesses,” he stated.

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