The recent appreciation of the Ghanaian cedi against major foreign currencies is unlikely to result in immediate price reductions for consumers, according to the President of the Association of Ghana Industries (AGI), Dr. Kofi Nsiah-Poku. He explains that local manufacturers are still working to recover significant losses incurred during the currency’s prolonged period of weakness.
Speaking on JoyNews’ PM Express Business Edition on Thursday, Dr. Nsiah-Poku provided insight into the pricing challenges facing industry players. He noted that when the dollar was at its peak, many manufacturers absorbed heavy losses to stay afloat, and those losses must now be recouped.
“At the time that the dollar was very high, I was making losses. Now that the dollar price is low, I have to recover the loss,” he stated.
Cautious Optimism Amidst Uncertainty
Dr. Nsiah-Poku emphasized that while the stronger cedi is a positive development, it is merely one factor in a complex pricing equation. A major concern for businesses is the uncertainty surrounding the durability of the currency’s gains. He indicated that industry players are not yet convinced the macroeconomic fundamentals are robust enough to sustain the cedi’s current position.
“Industry still does not think that the economy is so robust,” he said.
This skepticism is compounded by the nature of Ghana’s credit-driven economy. Manufacturers often supply goods to retailers and distributors on credit, with payments sometimes not received for months.
“This is a credit economy. If I manufacture and give it to my customers on credit, and they pay me in two, three, or four months, and by that time, if the gain has reversed, what do I do?” Dr. Nsiah-Poku queried, explaining the risk that makes manufacturers cautious about reducing prices too quickly.
High Utility Costs Offset Currency Gains
Beyond exchange rate volatility, the AGI president pointed to persistently high utility tariffs as a major burden on production costs. He argued that these costs, which often have foreign exchange components, should logically reflect the cedi’s improved performance.
“The cost of utilities is even high, even when the dollar is going down,” he stressed. “If the dollar is going down, we expect that utility cost should also be down, because we now have a higher cost, which is balancing the gain in the exchange rate.”
His comments underscore the delicate balancing act manufacturers face as they navigate currency fluctuations, credit risks, and rising operational expenses. While the cedi’s recent performance may signal an improving macroeconomic picture, Dr. Nsiah-Poku’s assessment suggests that for the real economy, the path to recovery is more gradual. He concluded that for industry, long-term stability and sustainability are far more critical than short-term currency gains.
