The Chief Executive Officer of Dalex Finance, Joe Jackson, has issued a stark warning about the future of Ghana’s currency, cautioning that the cedi will remain under sustained pressure unless bold structural reforms are undertaken.
Speaking on the theme “Ananse Stories About the Ghanaian Economy” as part of a professional development series organized by the Chartered Institute of Marketing Ghana, Mr Jackson challenged widely held assumptions about the drivers of currency depreciation.
He argued that the long-standing belief that excessive imports are primarily responsible for the cedi’s weakness is misleading. According to him, this narrative distracts from deeper systemic issues that continue to undermine the economy. “This is an Ananse story that hides the structural challenges confronting the economy,” he said.
Trade Surplus Fails to Strengthen the Currency
Mr Jackson pointed out that Ghana’s recent trade performance contradicts the import-driven depreciation argument. In 2024, the country recorded a trade surplus exceeding US$5 billion, yet the cedi continued to weaken.
He explained that the paradox lies in the limited portion of export earnings that actually remains within the domestic economy. While headline export figures appear strong, a significant share of the value generated does not translate into usable foreign exchange. “Exporting more will not help if we keep less than half of what we produce,” he stated.
This disconnect, he emphasized, highlights the importance of focusing not just on export volumes but on how much value is retained locally to support economic stability.
Forex Leakages Undermining Gains
A major concern raised by Mr Jackson is the scale of foreign exchange leakages that continue to erode Ghana’s economic gains. He identified several channels through which forex exits the country, including service payments, profit repatriation, debt servicing and capital flight.
These outflows, he noted, significantly weaken the positive impact of export revenues and contribute to persistent pressure on the cedi. “If forex demand exceeds usable forex, the cedi will remain under pressure,” he warned.
The concept of “usable foreign exchange” was central to his argument. This refers to the portion of export earnings that remains in Ghana and is available to meet domestic demand. Without improving this metric, he said, efforts to stabilize the currency will fall short.
Mining Sector at the Center of Outflows
Mr Jackson highlighted the mining sector as a major contributor to forex leakages. Despite Ghana’s strong gold export performance, the country retains less than half of the value generated.
He revealed that gold exports were valued at approximately US$11.9 billion in 2024, yet only 46 per cent of that value stayed within the Ghanaian economy.
The rest, he explained, is lost through management contracts, technical service agreements and profit repatriation by multinational corporations operating in the sector. “Ghana cannot continue taking less than half of the value created from its natural resources,” he said.
He compared Ghana’s situation to other resource-rich countries, noting that nations such as South Africa, Botswana and Nigeria have implemented policies that ensure greater domestic participation and value retention.
“South Africa retains more from its gold exports even though it exports less than Ghana. Botswana has a 50-50 joint venture model for its diamonds. Nigeria mandates higher domestic participation.”
Mr Jackson
Oil and Gas Sector Faces Similar Challenges
The concerns raised extend beyond mining into the oil and gas sector, where Ghana’s retention of export value is even lower. Mr Jackson disclosed that the country retained only about 35 per cent of export value in 2024.
This resulted in an outflow of more than US$2.5 billion, further compounding the pressure on the cedi.
These structural leakages, he stressed, overshadow the benefits of positive trade balances and make it difficult for the currency to stabilize.
Rethinking Policy Priorities
Mr Jackson urged policymakers to shift their focus from reducing imports to increasing domestic retention of export earnings. According to him, the current narrative that blames consumers and importers for the cedi’s depreciation is misplaced.
He emphasized that market behavior is driven by price competitiveness rather than patriotism, making it unrealistic to expect consumers to prioritize local goods at higher costs. “Price competitiveness, not patriotism, drives market choices,” he noted.
Instead, he called for a comprehensive review of Ghana’s economic structure, particularly in the extractive industries.
Call for Ownership and Contract Reforms
To address the underlying issues, Mr Jackson recommended a series of reforms aimed at increasing Ghanaian ownership and participation in key sectors. These include renegotiating resource contracts, strengthening local value chains and expanding domestic equity in extractive industries.
Such measures, he said, would improve foreign exchange retention, reduce external vulnerabilities and ultimately support a more stable currency.
He stressed that without these changes, Ghana risks continued currency weakness despite strong export performance.
A Wake Up Call for Stakeholders
Mr Jackson’s remarks serve as a wake up call for policymakers, businesses and citizens alike. He encouraged a broader understanding of the factors driving currency depreciation, emphasizing that the problem is rooted in structural inefficiencies rather than consumer behavior.
By addressing these deep-seated challenges, he believes Ghana can unlock greater value from its natural resources and build a more resilient economy.
Until then, the warning remains clear. Without decisive reforms, the cedi is likely to remain under prolonged pressure.
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