In a revealing analysis of pricing behaviour in Ghana’s business landscape, entrepreneur and member of the National Democratic Congress (NDC) communications team, Wonder Madilo has offered rare insight into how traders across sectors set prices and why a strong cedi may not result in immediate relief for consumers.
The explanation, which he described as “dark room economics,” highlights how market actors think, act, and hedge in unpredictable ways depending on their stock, sector, and profit goals.
“It’s not a blanket thing – that once that happens then we will reduce our prices. I said that there will be a seamless transition at that point”
Wonder Madilo, Entrepreneur
During his address, Madilo challenged the prevailing expectation that a sustained appreciation of the cedi against the dollar should naturally lead to rapid price reductions across the market. He contended that pricing is rarely straightforward in practice and often dictated more by stock history and psychological factors than just current forex trends.
“The person may sell his own at thirteen and I’ll still be selling my own at seventeen,” he said, explaining how the currency’s performance against the dollar at the time of procurement influences the different pieces of goods on the market, even when things seem to be better.
Madilo also stressed that pricing adjustments depend heavily on the nature of the product and industry. Unlike perishable goods where sellers must offload inventory quickly due to expiry dates, the scenario is vastly different for durable items such as generators, cables, and cars, where traders can hold stock longer and speculate.
“If I’m importing transformers, generators, and all that, they bring them in good loads and I won’t be importing every month,” he said, explaining that businessmen in such sectors work with stock acquired under older exchange rates. “That stock was bought at maybe 17 Ghana cedis to a dollar… By my next import, maybe the dollar has come to 13 Ghana cedis.”
He illustrated that even with a current interbank rate of GH₵13 to the dollar, businesses are not incentivised to sell at reduced prices if older stock was purchased at GH₵17. Instead, they wait for newer stock or test market conditions to decide whether or not to lower prices.
Speculating Buyer’s Market
While Ghana’s market is largely driven by buyers who influence prices through demand, Madilo pointed out that this doesn’t always result in competition that benefits the consumer. On the contrary, traders can collude indirectly, making pricing rigid even in the face of favorable currency movements.
He revealed some of the practices by the electrical industry at Opera Square, where buyers have no option than to pay the agreed price for products or walk away from the market with nothing, since the sellers work together to push products at their agreed price.
“They have their own platforms when they know what quantity you’re buying. So after they’ve told you they can’t sell it for anything less, they quickly inform their platform… and make sure that everybody is going to sell it to you at that price”
Wonder Madilo, Entrepreneur
Madilo further explained how some traders manipulate perceived scarcity to create artificial demand in the face of an appreciating cedi when they are dealing with older expensive stock. “Sometimes they even decide not to sell at all, and then you’ll have a shortage on the market and then the price goes up again.”
According to him, business actors, especially those in sectors dealing with durable goods, do not always operate on rational market assumptions. The motive is primarily profit, even if it means pricing above competitors to test if buyers will still purchase.
“All businessmen are crude,” he said pointedly, explaining that a seller who has the opportunity to sell at a lower price since they procured their goods at a favorable time would still want to price their items at the same level of those who procured their goods at more expensive rates, in order to make more profit.
In explaining why a trader might not lower prices despite buying at a better exchange rate, Madilo noted, “if he knows that he’s not making good margins, he will like to adapt.” He also warned of middlemen exploiting price differentials, purchasing cheaper stock and reselling at the higher market price to unaware customers.
Reflecting on the case of a consumer celebrating on social media over reduced cooking oil prices, Madilo hinted at the risks traders face in attempting to forecast the market.
“Those who can speculate smartly, if they know the expiry date of the market, will buy now and hoard, praying that the reverse of the cedi happens again so they will sell then. But what if it drops? Yeah well it’s a gamble”
Wonder Madilo, Entrepreneur
These insights arrive at a time when Ghana is battling inflation and market expectations amid cedi appreciation. While currency stability is a key macroeconomic goal, Madilo’s explanation suggests that without deep behavioural and structural shifts, consumer relief may remain sluggish.
READ MORE: Republic Bank Ghana Non-Executive Director Arimeyaw Ibn Saeed Resigns
