Due to the continuous depreciation of the cedi, which has resulted in excessive expenses and operating difficulties, especially in the food and beverage industry, Ghana’s business community is facing a serious dilemma. In addition to disrupting pricing methods, the local currency’s free slide has increased debt loads for many traders, particularly those who depend on imports.
The depreciation has a cascading effect through the supply chain. Ghanaian businesses typically operate on a credit basis, receiving supplies on credit from abroad and extending credit to local distributors, wholesalers, and retailers. However, with the rapid depreciation of the cedi, by the time payments from customers are collected and converted to dollars to settle with overseas suppliers, the local currency’s reduced value inflicts heavy financial losses on businesses. For some, this uncertainty has resulted in a major suspension of operations, placing unprecedented pressure on the traditional credit-based economic model.
The poor performance of the cedi has also drawn the attention of the Ghana Union Traders Association (GUTA). The president of GUTA, Dr. Joseph Obeng, described the depreciation as a “huge problem” for the trading industry in a statement. When combined with growing freight costs from Asia, operating a firm has become nearly impossible. “The present situation has significant ramifications and has led to a rise in pricing for consumers of products and services,” stated Obeng.
The general public is being impacted by the rising costs in addition to making it challenging for businesses to function successfully. The cost of items has increased, putting further pressure on customers who are already struggling to make ends meet due to local and international market forces.
The business community is pleading for action to stabilize the currency and offer relief immediately. Businesses and consumers alike face an uncertain economic future in the absence of strong steps to stop the depreciation of the cedi and control the inflation it causes. Policymakers must act quickly to create and execute plans that would stabilize the economy and assist the business community, especially those engaged in distribution and imports.
As things stand, Ghanaian economic discussion is still centered on the effects of the cedi’s depreciation, with participants from a range of industries looking for ways to lessen the difficulties brought on by this financial unrest. The results of these economic initiatives will have an impact on how resilient Ghana’s corporate sector is.
