By Emeka Nze
As inflation bites harder in Ghana, businesses are closing shop, even as foreign investors are divesting from the country’s economy due to uncertainty triggered by worsening value of the cedi which has depreciated by over 47 per cent against the dollar.
In the meantime, members of the Ghana Union of Traders Association will suspend commercial activities in the capital, Accra, from Wednesday to show their “frustration” over the weakening currency, surging inflation and high lending rates, Joseph Obeng, the union’s president, said by phone.
“We want to give the government the message that, whatever solution they are trying to bring to bear, they should do so with a sense of urgency,” said Obeng, who represents sellers of food, clothes, electrical parts and other goods.
A source told Media Issues online newspapers that some of the traders are contemplating relocating their businesses to Nigeria because of better stable business environment.
Ghanaian authorities are in talks with the International Monetary Fund for funding support of as much as $3 billion after the country was priced out of global debt markets this year. The government seeks to reach an agreement with the multilateral lender within weeks to help fund its economic program.
An exit of foreign investors prompted by concerns over the sustainability of the country’s debt has contributed to a 47% depreciation of the cedi against the dollar this year, making it the world’s worst-performing currency. That in turn has accelerated inflation, which rose for 15 consecutive months until the statistics office changed the way it measured price moves. Annual inflation stood at 37.2% in September.
The central bank has increased its benchmark lending rate by 10 percentage points this year to 24.5% in a bid to tame price growth, bolster the currency and lure back investors. That’s led to increased borrowing costs for traders.
-Bloomberg