How Bawumia intends to solve profit repatriation problem affecting Cedi

Profit repatriation by foreign businesses is one of the major concerns raised by the Ghanaian trading community as the move affects the strength of the local currency - Cedi against major trading currencies, especially US Dollar, Euros, and Pounds Sterling.

When foreign investors send back the profits made in Ghana to their home country after meeting the host nation's tax obligation, then it is said that the business owners or investors have repatriated their profits.

As the Cedi have witnessed sharp decline in value in recent times, it has dire consequences on both the trading community and Ghanaians at large.

According to the flagbearer of the New Patriotic Party (NPP), Dr. Mahamudu Bawumia, he will stabilise the Cedi through the gold purchase programme if elected president in the upcoming general election.

He explained that the domestic gold purchase programme allows the Bank of Ghana to boost its foreign exchange reserves by buying locally produced gold with Cedis.

This, he said, will provide the anchor that the local currency has always lacked.

Dr Bawumia while speaking at the NPP’s manifesto launch in Takoradi on Sunday, August 18, 2024 said, “I am happy to say that the two policies that helped rescue the economy from catastrophe in the recent crisis were the Bank of Ghana’s domestic gold purchase programme and the Gold For Oil (G4O) programme. The pilot has worked for a number of companies, some of which wanted to forex to repatriate profits. We have, thus, found a solution to profit repatriation problem without destabilising our local currency."

"This also brings major comfort to foreign investors operating in our country. I believe from the success of the pilot scheme, we can confidently say that we have found a solution to the age-old foreign exchange problem that successive governments have struggled to contain, and which invariably led to inflation and other macro-economic challenges. Simply put, the domestic gold purchase programme (DGPP) is a policy which allows the Bank of Ghana to boost its foreign exchange reserves by buying locally produced gold with Cedis," he stated.

The NPP flagbearer further said, "Gold purchases from this programme alone have amounted to $5 billion in the last couple of years. With Ghana’s unexplored gold reserves estimated at 5 billion ounces (and a market value today of $10 trillion dollars). Put simply, if for example a company wants dollars, we will take their cedis, buy gold, and give them dollars. In this situation demand equals supply. The gold purchase program will, therefore, provide the anchor that our local currency has always lacked.”

The domestic gold purchase programme aims to cover all major forex demands in the country and stabilise the Cedi.

SA/NOQ

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