PERISCOPE DEPTH
…With Our Publisher
As I sat behind my computer and pulled my keyboard towards me to start to type this week’s version of this column, I decided to check for two facts online. The first was to find out the rate of one the world’s worst currencies as at Sunday, 6th March, 2022 at 12.53 pm. That currency was the Iranian Rial, and it was selling at a 42,325.00 Iranian Rial for one dollar. I then checked the rate for the Ghana Cedi, and it was GHc7.08 to the dollar. If, as we said in June 2007, the value is the same, then, in effect, one needs C70,800.00 (seventy thousand, eight hundred cedis) to buy one dollar.
The value is the same. The Cedi cannot escape its real nature and value by deciding to call itself the ‘Ghana Cedi’ and shedding a few zeroes. Those zeroes might have been rubbed off artificially, but they are there. They will always be there. And their weight will constantly and consistently drag the pockets of Ghanaians.
Their unacknowledged presence also makes the Cedi the de facto worst performing currency on the face of our planet. I say this not with any joy, but in sober acknowledgement of the fact that if we do not acknowledge this fact and take pragmatic steps to stem the fall of the Cedi, very soon, our ‘comfortable’ self-delusion of the Ghana Cedis would also disappear, and Cedi would plunge at an unprecedented rate.
When I was reading philosophy at the University of Ghana, we used to talk about the form of things, and the substance of things. When, fifteen years ago, the then government proposed the idea of ‘redenominating’ the Cedi, I was one of the bitterest critics of the policy. I said that the zeroes that were being artificially rubbed off had arrived at the back of the currency in the first place for a reason. When the Cedi was first introduced in Ghana as the medium of exchange, it was as strong as the British Pound, and stronger than the United States dollar. By the 1980s and 1990s, it was exchanging at a rate of ten thousand cedis to the dollar. An astonishing, astronomical, unprecedented fall in value. There must be a reason for the fall.
The reason for the catastrophic fall in value were economic and social reasons, and until and unless Ghanaians identified those reasons and addressed them, I argued that the Cedi, if artificially redenominated, would naturally acquire the zeroes again.
I turned out to be right. When the Cedi was first redenominated, it was trading at GHc 0.92 to the dollar. As I write this piece, it is GHc7.08 to the dollar, in just 14 years. Give it a couple of more decades, and it will be squarely back to the situation in the 1980s and the 1990s. Only that this time, the situation would be much worse. In real terms, the Cedi would be exchanging for the dollar at a rate of hundreds of thousands, instead of tens of thousands.
Back to the University of Ghana again. In my first year at Legon, I studied a subject called ‘Economy of Ghana’. That course contains the reason why our currency continues to depreciate, and I remember telling myself that every Member of Parliament, every politician, every public servant and indeed every Ghanaian should be compelled to read that course and take it to heart.
Yes, the solution to the problem of the Cedi is in dusty books at the Economics Department of the University of Ghana.
What is the true and underlying cause of the depreciation of the Cedi? The cause is the Import-Export Ratio. In simple terms, Ghana imports much more than we produce. Kofi Wayo (where is he?) used to relate an analogy when we used to share anecdotes some time back. He used to say that one small container full of mobile phones, equals several huge ships of cocoa we export. Now, imagine the number of containers of mobile phones we import into Ghana each year. The value of mobile phones alone that we import into Ghana may run into tens of millions of dollars. We pay for those mobile phones with Cedis, but before we can pay, we necessarily have to convert the Cedi to dollar. That naturally imposes a huge burden on the Cedi, causing it to depreciate. So we export raw cocoa beans, and import hi-tech finished products like mobile phones, computers and many such.
Now, you would notice that virtually everything we consume in Ghana, is imported. Our food staples, our clothing and apparel, all the equipment we use, and even much of the roads we ride on, is imported. Even the toys our children use to play, is imported. A single celebration of “Valentine’s Day’ imposes impossible pressure on the Cedi.
Even what we read, is imported. You might be reading this article in a newspaper. Every single item that went into the production of this newspaper is imported, with the exception of the labour, and that is the cheapest aspect of the production of the newspaper.
In January 2017, publishers of newspapers were buying a bundle of newsprint at GHc35 (thirty-five Ghana cedis). As at the beginning of March, that same bundle is selling at GHC165 (one hundred and sixty-five Ghana cedis). We were buying a box of heat transfer plate at GHc200.00 in January 2017. I bought one recently. It is selling at GHc550.00 now. That is if you can get some to buy.
Our buildings are imported (clinker). Every tool we use to build is imported, leaving only the sand and labour.
We even convert Cedis into dollars to import garbage. Much of what we consume in Ghana, is garbage (used and discarded products) from the West and the East. I am talking about ‘obroni wawu’, which is what most of us wear, and occupy our houses with. Second hand clothes, televisions, refrigerators, cars, you name it, we import it. We use our currency to import the waste of other continents, when they should be paying us for the privilege.
The gravamen of my argument, is that unless and until we do something about the Import-Export ratio, the Cedi will continue to depreciate. That is a simple economic fact. I have little or no knowledge about economic matters, but my child who is ten years old, appreciates my argument. This morning, to try whether what I was about to write made sense, I called him and had a chat and an experiment with him. I said that we were going to look around us and try to list the things around us and divide them into imported items, and Ghana-made items. By the time we finished, over 95% of the items around us turned out to be imported. By the way, that included the bread we had for breakfast. The flour, the yeast, the sugar, the flavouring, the colouring, and much that went into the bread, was imported. The oven was Ghana-made, but the iron sheets were imported. The gas that the oven burns could be from local sources (Ghana Gas Company), and the cylinders (Ghana Cylinder Manufacturing Company) but the valves and the rubber pipes are surely imported.
The bottom-line, is that the problem with our Cedi, is not so much economic, as it is social. We are virtually eating and consuming ourselves to poverty and unemployment. This is because everything we consume, is imported. And everything we import, is produced. And everything that is produced, means a job. So we are creating jobs outside of Ghana. We are also creating a heavily depreciating currency, which means that by our consumption, we are directly creating unemployment, and poverty, in Ghana.
Ghanaians are used to imported milk and beverages. I visited a friend in his office, and he pulled out a bottle (when I say bottle, I mean a glass bottle) of imported water. I watched his face as he swigged the water, and I could see how very impressed he was with himself that he was drinking water imported with dollars, in the comfort of his office in Accra. And then I sat and enjoyed him as he lectured me on how fast the Cedi was depreciating.
I told myself that he should continue to enjoy ‘imported water’, because his currency would continue to fall.
The problem is therefore quite simply, beyond the ambit of even President Akufo Addo, and opposition Leader and potential future Ghana President John Mahama. It is beyond Mahamadu Bawumia and John Alan Kyerematen. It is beyond the Governor of the Bank of Ghana. It is our acquired taste as a people, and until we achieve leadership in Ghana that would attempt to try to lead us to change our sense of taste, we would continue to be doomed, and the Cedi would continue to fall.
“Great minds discuss ideas; average minds discuss events; small minds discuss people.”- Eleanor Roosevelt
(This article was first published in the column PERSICOPE DEPTH of the Daily Searchlight of 09/03/2022. The Daily Searchlight appears on the newsstands of Ghana every working day and for sale online twenty-four hours a day all day throughout the world on www.ghananewsstand.com).
