Investors lost hope in the economy and have reduced importation – Economist on cedi appreciation

Ghanaian Economist and Lecturer at the University of Ghana Business School (UGBS), Professor Lord Mensah, has attributed the cedi appreciation to the lack of investor confidence in the country’s economic structure.

According to him, the cedi appreciation against the dollar comes as good news, however, efforts to stabilize the country’s economy would not endure over time.

In the latest interview with e.tv Ghana’s Samuel Eshun on the “Fact Sheet” show, Prof. Lord Mensah cautioned Ghanaian businesses that imports in this year’s festive period would not be enormous as in previous years, hence less demand on the dollar as against the cedi.

“We can attribute the cedi appreciation to several things. Clearly, traders lost hope in the economy at a point in time and this Christmas, the import volumes that are expected is not going to be like it used to in previous years,” he shared.

“This tells us that when the dollar against the Cedi was hitting around 15, even if you’re an importer you’ll ask yourself so many questions. If you import, what prices are you going to put in the goods and then will you get buyers. So at a point where you the trader thinks through this sentiment that you’ll not get buyers to buy your product at that high price, you’ll not be happy to import anymore. So that is one of them. The traders have given up on the economy, reduced their importations and clearly, volumes of demand for the cedi on the dollar has completely reduced.”

He further indicated that the reduction in global oil prices further proves that the volume of demand for the dollar is proof that the appreciation of the cedi is barely the government’s effort, but rather consistent with global situations.

“Another factor to consider is that somewhere around June, the global oil price per barrel was moving around $1010 per barrel and now the price is around 70 there about. So there is a drastic reduction. That tells you that the volumes of dollar demand for importations have also reduced completely. If it’s not more than 45% it should be closer to it.”