Spare-parts dealers protest forex controls

The new foreign currency rules issued by the Bank of Ghana (BoG) will push importers away from the banks and erode gains made in enticing people into the banking system, Mr. Siaw Ampadu, chairman of the Used Spare Parts Dealers Association, has said.

“By the new policy, government is telling us that we should not put our monies in the banks at all. If we go to the banks and we don’t get the amount of foreign currency we want, we will keep the money and go to the “Gao, Gao” [black market] to change into foreign currency.”

The World Bank estimates that 70 percent of Ghanaian adults do not have a bank account -- not only because of poverty, but also because of the cost, travel-distance and amount of paperwork involved in opening one.

Mr. Ampadu fears the new controls will worsen the situation. According to him, “this will scare importers from the banks. We will prefer to keep our monies with us than deposit it with the banks”.

The BoG announced new foreign currency rules as part of efforts to stabilise the cedi against the major trading currencies.

Among others, the new rules ban banks and other financial institutions from issuing cheque books and cheques on foreign exchange accounts (FEA) and foreign currency accounts (FCA).

The directive also enjoins them not to grant a foreign currency-denominated loan or foreign currency-linked facility to a customer who is not a foreign exchange earner.

Over-the-counter cash withdrawals from foreign exchange and foreign currency accounts, under the new directives, shall not exceed US$10,000 and will only be permitted for travel purposes outside Ghana.

All undrawn foreign currency-denominated facilities are also to be converted into local currency-denominated facilities as part of the new rules. However, existing fully-drawn foreign currency-denominated facilities and loans to non-foreign exchange earners shall run until expiry.

Many importers are unhappy about the controls, but the BoG’s stance is resolute as it says it aims to roll-back dollarisation of the economy