Gov’t must diversify, export more to address Cedi depreciation – Dr John Kwakye

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Dr John Kwakye, Director of Research, Institute of Economic Affairs, has called on the Government to expand the country’s export drive to earn foreign exchange to address the falling cedi.

He urged the Government to diversify its natural resources and add value to them to generate the needed revenue for the country, stressing that the country relied heavily on its primary products.

Dr Kwakye, speaking in an interview with the Ghana News Agency in Accra, on measures to address the cedi depreciation, said the total value of cocoa globally was 10 billion dollars, with Ghana and Cote d’voire contributing about 60 per cent of the share.

With these contributions, Dr Kwakye stated that the two countries should have used their comparative advantage to have the biggest cocoa industries in the world to address some of their economic challenges.

The cedi depreciation, he stated, started several decades and attributed the causes to supply and demand, which had exposed the country’s vulnerability and existing structure.

The cedi has so far depreciated by about 30 per
cent to the US dollar in 2022 as against an appreciation of 0.5 per cent during the same period in 2021.

He said the country needed a long-term solution such as establishing a gold refinery, oil refinery, and cocoa processing plant to add more value to its products and be competitive in the world market to address the cedi depreciation.

Dr Kwakye said the Governments over the years had not shown any commitment to working towards addressing the issues, stressing “we need structural changes to be economically viable.”

“The reluctant nature of our leaders to take bold decisions on our natural resources has worsened the situation. Because of the personal benefit, they are not able to negotiate better deals for the country with foreign companies,” he said.

He said the duopoly of the New Patriotic Party and the National Democratic Congress was not helping the country’s economic development path, and called on civil society organisations to push harder to ensure drastic change.

Dr Kwakye said the Ukraine War and the COVID-19 pandemic were external factors that contributed to economic setbacks and currency depreciation globally, and noted that many economies had survived the shocks.

He stated that these external factors, had exposed the country’s vulnerability because the state was not efficiently prepared to withstand the shocks due to its overdependence on primary goods and the inability to match our import and export products.

He said the IMF bailout intervention, the 750 million dollars from Exim bank and the cocoa syndicated loan would bring some form of stability into the country’s economic space for the short-term and called for a sustainable drive to boost the industrial sector.

Dr Kwakye stated that the cedi injection into the system would solve the problem of cedi depreciation, and that the Francophone countries had established a monitoring union that imposed strict rules to prevent government borrowing from the central bank to ensure fiscal discipline.

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