The travails of the cedi and Ghana's trade anaemia
The appointment of Hannah Tetteh last year as Ghana's Minister for foreign affairs signalled a statement of intent by the President to strengthen Ghana's outward trade. Until then the country's balance of payment deficit was relatively low and generally remained below 1billion dollars. A move to commercialise the country's diplomacy would have been a welcome shot in the arm of Ghana's trade ministry. But as last year's trade data shows, Ghana increasingly imports more than it exports.
It is one year down the line, and the performance of the cedi has rudely brought to the fore the urgency of the matter of trade more than ever. The poor performance of the national currency against the dollar and the pound sterlin has become topical in recent days and for good reason. But anyone who advocates the need for a boost in trade ought to be aware of the question, 'what are we to trade with?' In other words, what products has Ghana to make available to the 150 million Nigerian population, or the over 1billion Indian population?
The above question exposes Ghana's trade wretchedness on the global stage. And that is what partly explains the Cedi's current travails against the country's major trading partners. The logic is this: that if we cannot manufacture enough products that substitute the imported ones Ghanaians use and are seemingly addicted to, they will drive demand for the foreign ones; and that demand will cause our businesses to purchase the dollar in other to import such products. All things being equal, an increased demand (in this case, for the dollar) leads to an increase in the price (of the dollar).
Even though this fact is obvious, and perhaps moot, the debate in the media largely focuses on the recent slump in the cedi against the dollar. Worse, the discussion has taken a poisonous political twist making a frontal and dispassionate diagnoses even more difficult. Daunting as it is, no time is better for doing good diagnoses than now.
It is apparent that the real problem with o ur economy, a symptom of which is the depreciation of the currency, is whether our productive and manufacturing sectors are rising to the occasion of rising middle class and demand. Ghanaians are consuming more imported rice, chicken, fish and shaki than before!
Take rice production for example, the average Ghanaian, in 1985 consumed 12.7kg of rice per year. By 2010 that figure was 24kg. That is per person! And that is in a country of a healthily growing consuming market, characterised by a middle class in search of sophistication, mistaken to mean foreign taste.
This strong and growing demand is met by a private sector which, over the last three decades, had been herded by ill-advised liberal trade policies, towards importation. That situation colluded with a weak national rice production/processing/distribution capacity to make Ghana an oasis of unfettered consumers. A similar nexus pertains to the country's poultry, cooking oil, and even fisheries sectors.
Indeed, whiles the country loudly whinges about the recent travails of the cedi, we are somehow not equally asking ourselves whether as a country our businesses are producing or adding value to any resource. If they are, are we, the state especially, consciously harnessing markets for such business and their products?
Commercial Diplomacy has been the stock in trade of most economically ambitious and successful countries. Countries across the globe pursue their international economic interest through enhancing trade policies. In the case of Ghana, however, we appear to be tied to the apron strings of the 'big bullies' of global trade. Our on-going sleep-walk into the Economic Partnership Agreement is a case in point. Unless the citizens get restless enough, the EPA noose will soon be firmly on our neck.
This notwithstanding, it is worth noting that major infrastructure projects are currently underway to improve the environment for doing business in Ghana. But these must be matched with equally ambitious manufacturing and trade policies that exploit our competitive advantage to its optimum. We must be actively exploiting all opportunities to break all barriers to Ghana's outward trade.
As a country, we must grow more of our own, add value to more of our own, consume more of our own, nurture foreign consumers of more of our own through trade. Britain, the US, Japan, South Korea and now China did it. Why can't we?
By Kofi Adoli, London.