Vice President of the Ghana Union Traders Association (GUTA), Clement Boateng, has called on government to stop the dollarization of the country’s economy.
According to him, despite the fact that duties paid at the port are in cedis, it is benchmarked against the dollar and the duty rate. He revealed that the rate is reviewed every Tuesday and it is always going up because of the depreciation of the cedi.
Mr Boateng explained that the depreciation of the cedi has a very negative impact on businesses as they always have to top up to be able to meet the dollar equivalent for transactions to be undertaken.
“Everything that we do is benchmarked on the dollar and we think the government must do something about the situation. The dollarization of the economy must be stopped and the government should find partner banks in China and the other places we import most of our goods from, so that importers will pay cedi to the government whereas the government also pays our suppliers through their partner banks overseas. We want the government to also check the activities of the Black Market.”
Clement Boateng
Mr Boateng expressed the need for government to equally review the profit repatriation law to ensure multinational firms in Ghana repatriate their profits in tranches within the year. He noted that the bulk repatriation puts pressure on the cedi against the major international trading currencies.
The Vice President of GUTA indicated that most of the major companies in Ghana are foreign owned and they always tend to send their profits back to their countries, putting Ghana at a disadvantage.
“If we talk about the telecommunication companies, the oil and extractive sectors, at the end of the year, they are repatriating their profits back, and you can see the chunk of monies they take from here so the government must look at its investment laws to make repatriation in tranches.”
Clement Boateng
Impact of cedi depreciation on businesses
Justifying his stance, Mr Boateng stated that 17% increase of the base rate by the Bank of Ghana implies that commercial banks has to accordingly increase the lending rate. This, he indicated, means that the business person will also transfer it to consumers.
“However, it is the final consumers who bear the additional cost incurred because business people will always protect their profit.”
Clement Boateng
Commenting on the possibility of government injecting some $2 billion into the country’s dollar reserves towards stabilizing the exchange rate, Mr Boateng highlighted that the benefits of this measure and its impact could potentially be experienced in the last quarter of the year as the situation will not change immediately.
Currently, he explained that the “Ghanaian consumer is overburdened hence they are not buying and businesses” are going down.
“We are in a dire strait and have to keep squeezing ourselves until the last quarter of the year.”
Clement Boateng
Prior to this, the President of GUTA, Dr Jospeh Obeng, revealed that the depreciation of the cedi against other major trading currencies is getting out of hand. He indicated that as result of the current exchange rate situation in the country, businesses are seriously “bleeding to death”.
Dr Obeng noted that businesses have reached a situation where their survival is seriously threatened, if no immediate action is taken by the government to find solution.
