Accra, Ghana – The Ghanaian Cedi has recently experienced a period of appreciation, prompting optimism from government officials who point to sound economic management. However, Richard Ahiagbah, Director of Communications for the ruling New Patriotic Party (NPP), has voiced a dissenting opinion, cautioning against celebrating a strong Cedi without a corresponding increase in domestic production and exports.

Ahiagbah argues that while a strong Cedi may seem beneficial on the surface, particularly for importers, it poses significant risks to Ghana’s job market and long-term economic stability. His concern is that this artificial strength, divorced from real economic productivity, could undermine local industries and hinder the nation’s progress toward self-reliance.

The recent appreciation of the Ghanaian Cedi has sparked debate about the true health of the economy. While a strong Cedi might be visually appealing, Ahiagbah suggests that it’s crucial to examine the underlying factors driving this strength and its potential consequences for Ghanaian businesses and workers.

The Double-Edged Sword of a Strong Cedi

Ahiagbah’s core argument centers on the imbalance created when a currency appreciates without a corresponding surge in domestic production. “When the Cedi is strong, it’s good for imports but bad for exports,” he stated, highlighting the immediate impact on different sectors of the economy. A strong Cedi makes imported goods cheaper, which benefits importers and consumers in the short term. However, it simultaneously makes Ghanaian exports more expensive and less competitive in the global market.

This dynamic, Ahiagbah warns, can lead to a decline in local industries as they struggle to compete with the influx of cheaper imports. The result can be job losses and a weakening of the domestic manufacturing base. He draws a parallel with China, a nation that strategically manages its currency to support its export-driven economy. By carefully controlling the value of its currency, China maintains a competitive edge in international trade, fostering economic growth and job creation. Ahiagbah questions why Ghana isn’t prioritizing export growth in its currency strategy.

The Missing Link: Production and Export-Led Growth

According to Ahiagbah, a currency’s value must be intrinsically linked to the productivity and output of its economy. He sees a contradiction in celebrating a strong Cedi without a corresponding increase in industrial output and export capacity. “It is conflicting for a party that campaigned on jobs to be pursuing and celebrating a currency stabilisation that is not production-led,” Ahiagbah stated. He emphasizes that true economic stability comes from a robust and productive economy, not solely from currency appreciation.

A production-divorced strong Cedi, Ahiagbah argues, also hinders efforts to reduce Ghana’s import dependency. If local industries are unable to compete with cheaper imports due to an artificially strong currency, the nation remains reliant on foreign goods, stifling domestic growth and job creation for Ghanaian youth. “Any strengthening of the Cedi that is not production-driven is likely to make it harder, if not impossible, to achieve the general consensus on import substitution… and create job opportunities for our youth,” he explained.

Re-evaluating the Cedi’s Performance: A Call for a New Perspective

Ahiagbah is advocating for a paradigm shift in how Ghana evaluates the Cedi’s performance, with a strong emphasis on exports. Ghana, according to Ahiagbah, needs to prioritize the Cedi’s role in supporting an export-led economic model. “We cannot but explore the export angle of the Cedi’s performance because that’s where the heavy lifting has to be done to create the requisite opportunities to grow our economy,” he stated. This means focusing on policies that make Ghanaian goods more competitive in international markets, fostering innovation, and supporting local industries.

While the government views the strong Cedi as a reflection of sound fiscal management, Ahiagbah contends that the real test lies in sustainable economic growth and job creation. He urges policymakers to consider the long-term implications of currency policies and prioritize strategies that promote a diversified and export-oriented economy. A strong Cedi, in his view, is only truly beneficial if it is underpinned by a strong and productive economy.

In conclusion, Richard Ahiagbah’s warning highlights the potential pitfalls of celebrating a strong Cedi without addressing the fundamental need for increased production and exports. He emphasizes that Ghana’s long-term economic stability hinges on a production-driven approach to currency management, one that prioritizes export-led growth and supports local industries. Policymakers must consider both sides of the Cedi equation to ensure a prosperous future for Ghana.