The Bank of Ghana has warned that Britain’s exit from the European Union (EU) bloc could negatively impact Ghana’s trade sector, Foreign Direct Investment(FDI), and the cedi.
The central bank further points out that , Ghana’s strong trade relations with both the EU and the UK could be affected, with Ghana losing some budgetary support from the EU.
According to Bank of Ghana, its initial assessments after the Brexit indicated that the local currency appreciated sharply by about 5.7 per cent month-on-month against the pound sterling in June 2016, compared with 1.3 per cent depreciation in May.
In June this year, the United Kingdom voted to leave the EU after joining the union for over four decades. This latest response from the Bank of Ghana which is the fisrt since the Brexit comes after Banking consultant and Head of the Osei Tutu II Centre for Executive Education and Research, Nana Otuo Acheampong warned that the exit could affect the local currency and remittances.
The central bank has however assured that it is closely monitoring the potential fallouts from post-Brexit negotiations to take the necessary policy actions to dampen any adverse effects on the domestic economy.
Other views on impact of Brexit
After the announcement, Ghana’s Minister of Foreign Affairs, Hannah Tetteh, was of the view that the Brexit will affect Ghana’s trade with the UK.
The Brits voted on Thursday to exit the European Union after more than four decades of joining the common market. She stated that the impact even though may be felt more in the long run may have some repercussion for Ghana’s trade.
Senior Lecturer at the University of Ghana Business School, Dr. Lord Mensah has also stated that the cedi could be affected since the pound has a special relationship with the US dollar. He was however of the opinion that the Brexit could cause the demand for gold to go up, helping Ghana to generate more income from the commodity.
Recent statistics shown that, trade between Ghana and the United Kingdom has reached £1.3 billion. Ghana is currently the UK’s fifth largest trade partner in Sub-Saharan Africa.