Ghana’s Cedi is fading, making it harder for any hope of ECOWAS’ planned single currency. As Nigeria’s Naira remains in a miry clay as a currency, and Cedi ceding strength to currency gravity, ECOWAS’ two leading economies are becoming yoyos. This is the reason I do not believe that ECOWAS has any business of forming a currency union, in a highly heterogeneous economic region, if it does not want to see massive welfare losses. I have made this point many times in African Union meetings and papers I have sent during Congresses.
(While in banking, they paid for me to study currency and welfare losses in a doctoral program in banking and finance.)
Nigeria and Ghana’s existence today is possible because their central banks have the flexibility to play tricks through many factors including devaluation. Take away the local factors from them, and move to a supranational central bank that governs ECOWAS, you will create a real challenge in ECOWAS.
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What ECOWAS needs right now is to see some homogeneity in economic structures, trade more, and over time can have a currency union. By then, the rascality in Accra and Abuja would have been normalized! We can use tech to create a seamless “integration” in currency while allowing countries to continue to manage their currencies.
Ghana’s currency Cedi has continued on its downward trajectory that degenerated following the outbreak of Russia-Ukraine war.
Bloomberg reported Wednesday that the Cedi recorded its worst decline in three years, making it the worst-performing currency in the world after Sri Lanka’s rupee.
According to the report which is based on Bloomberg currency performance ranking, the Cedi dropped 1.1% on Wednesday, stretching its decline for the week to 5.2%, which marks the currency’s worst fall since March 29, 2019.
Comment on LinkedIn Feed
Comment: “Boya” we should start again – adopt a new currency in case these ones were ill fated. Don’t worry about factories, we had loads of them but greed and nepotism were our watchword. Just change the currency, the change mantra suits us fine.
Response: Absolutely – the strength of currencies comes from factories and warehouses (the old and new types)
Ghana Raises Interest Rate to 22% As Cedi is Ranked Worst Performing Currency in The World
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Our bias towards local currency value isn’t different from the one we hold towards school certificates. We are entitled people by default, so we feel that a graduate must earn a certain amount as salary, not by virtue of his/her capabilities, but simply for presenting a paper with some colours and designs. When you ask anyone to measure productivity against salary grade, then confusion ensues.
So, by the same token, we just expect our local currency to remain stable and up there, until you ask the proponents – how exactly? We are not real people, but in our illusions and delusions, we keep assuring ourselves that we are real and serious.
The containers that bring goods and empty them on our shores, what are they loaded with when returning? It is called balance of trade. If you import wines and shoes and when sending the containers back you load cashew nuts and ginger, have you really balanced trade? One set are finished goods, the other set are farm harvests, no value add, and we cannot even load enough of the the primitive stuff let alone commanding higher value via value add.
The same way all the papers we call certificates cannot help us, same applies to fiddling and venerating the naira/cedi, until you put life in them.
I agree with your thoughts. The wealth of any nation is based on productivity and value addition. Some countries of the world have decided to milk the rest of the world through Certificates when less than 20% of their own citizens are certificated. They make big money and that is how they balance their own foreign trade. Let us go back to what we can do with our hands and brain and obtain Certificates on them. Let us be practical!
On the issue of currency value, we can no longer rely on the components dictated by the West. Let us look for alternative measurements.