African viewpoint: Money matters

 
A woman with cedi notes

In our series of viewpoints from African journalists, Elizabeth Ohene - who was a minister in Ghana's former NPP government - compares what is happening in the eurozone with the crisis of her country's currency.

I have of course, like everybody else on the globe, been following the euro crisis. There is no escaping it.

Even though, I must confess freely, economics is not my strongest area of expertise.

But it would seem the relentless coverage of the financial meltdown in much of the developed world has forced all of us to learn the arcane language and ways of the economists.

The one thing I have learnt in following the eurozone problems is that no matter how hard I try, I cannot understand what is going on.

Traders in Ghana walk past an foreign exchange bureau Some Ghanaians have been complaining about the cost of living

You need to master the politics of Greece, Ireland, Spain, Portugal and Italy, as well as Franco-German relations to be able to understand the euro; and that frankly is all too much for me.

So I had thanked God for the small, simple currency that is the Ghana cedi.

But, I am afraid, now there are strange things happening to the currency and it is looking like you need the same high-level financial expertise to understand our humble cedi.

'Unpatriotic'

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It takes a serious emergency for a Ghanaian man to go to the market to buy kenkey”

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A few months ago, the government counted as one of its achievements the claim that the currency had been stable under their watch.

This claim appeared a touch unreal as the prices of goods did not seem to bear this out.

In fact, the prices of goods seemed to go up every time I looked and people appeared to be complaining a lot about the cost of living.

Vice-President John Dramani Mahama offered a theory that was new to me that those who were complaining must be suffering from a condition that makes a person unable to acknowledge the truth because of a preset mental condition.

He did not give this condition a name, but I decided to call it the "Dramani Syndrome"; after all, it is not every day a vice-president makes a discovery that adds to the knowledge pool of a serious discipline like psychiatry.

Then John Atta Mills, the president of the republic, made a dramatic intervention.

A kenkey maker in Ghana A woman prepares kenkey which is often sold as a ball in a banana leaf

He staged a walkabout in one of the open markets in Accra to buy a ball of "kenkey" - a local staple that is eaten for breakfast, lunch or supper - to prove that prices were not as high as his political opponents were suggesting.

It takes a serious emergency for a Ghanaian man to go to the market to buy kenkey, particularly when his wife is around. That is very much a job for women.

Then I read a newspaper editorial which seemed to suggest that some unpatriotic people were talking down the cedi.

If you talked openly that the currency was depreciating, it would do just that even though it was not weak at all.

Now I happen to like the vice-president, and the Dramani Syndrome sounded like a condition that might land me in the psychiatric hospital so I determined to see no evil and talk no evil.

"The cedi is strong, the cost of living is low," I kept repeating to myself.

I stopped buying kenkey because I did not want to contradict the president.

Election year

I am not quite sure at which point things changed and it became official that indeed the currency was having difficulties.

An editorial in a newspaper described as the mouthpiece of the government has gone so far as to describe the cedi as being in free fall.

Then in the last week a delegation came from the IMF to see things for themselves; and they said openly that the cedi was depreciating and the cost of living was rising.

Had they been struck with the Dramani Syndrome, I wondered?

Surprisingly, the president did not pull out his ball of kenkey to contradict their findings.

He did say, though, that this being election year, he did not want the people to suffer.

The eurozone countries have been having elections - Ireland, Spain, France, Greece - and it sounds to me like the "cedizone" is watching carefully.

If you would like to comment on Elizabeth Ohene's column, please do so below.

 

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  • rate this
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    Comment number 19.

    We must all accept our realities if we are to improve our lives.

    Too many governments in the world are publically in denial about the state of their affairs for fear of losing face on the world stage and/or power at election time.

    Maybe it is time for a brand new era of leadership beyond corrupt officials and insecure politicians?

  • rate this
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    Comment number 18.

    I can see the dilemma for Messrs Mills and Dramani and applaud their attempts, but the Brirtish have a much more elegant solution for that. Basically it consists of focussing on the Euro and Eurozone, offering perpetual advice and comment on how they should deal with it, while happily ignoring your own currency has depreciated against everone else's by more than 30% over the past few years...

  • rate this
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    Comment number 17.

    Ohene. As a former minster, I expected something in a form of actual problem identification or solution from you. But you rather run your mouth like the politicians in the country without any alternative solution. I wonder how on earth you use this opportunity to raise important issues on this platform to rather spew your political immaturity.

  • rate this
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    Comment number 16.

    Ohene. The first time you write and put your political biases aside will be the day I respect you as a journalist. You raise a good point but for you lack of thorough investigation, you sound like the uneducated puppets on PeaceFM. Is simple, the entire global economy is in trouble. Ghana does not export as much as they import. Lack of export puts a heavy load on your currency.

  • rate this
    +1

    Comment number 15.

    It's a wonderful idea for politicians to do the household shopping once in a while. At least give Mr Mahama credit for doing his own research and not paying some "government advisor". Perhaps Mr Osborne might try it some time.

  • rate this
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    Comment number 14.

    Why do Governments especially those in Africa always wait for IMF's opinions rather than that of their citizens before they believe the obvious and take action? Who exactly are they accountable to? Pro-West IMF or their electorates?
    Even some of the western countries in crises like Greece are beginning to go against the IMF how much more we Africans?
    Electorates opinions should come first, please!

  • rate this
    0

    Comment number 13.

    I have been conducting a survey myself; into the price of pasties. I can reveal that the pound must be in freefall and our government in denial. Expect a visit from the IMF soon.

  • rate this
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    Comment number 12.

    Has Ghanaian's wondered why the president bought four balls of kenkey? So far as I know, the President has a family of two, himself and the wife. He has to buy four in order to satisfy the two because one is so small to satisfy them.This tells you how hard the Ghanaian economy has become.

  • rate this
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    Comment number 11.

    Now that the IMF has confirmed that the cedi is at the roof as against the US dollar and life in Ghana is unbearable, the government of the day has accepted it and the President says he will see to fix it. Why was the NPP running mate chastised and rudicled when he raised this same alarm. Africans let's stop this hypocrasy.

  • rate this
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    Comment number 10.

    busha - much of the infrastructure in the UK was built up from the proceeds of empire.

    And now you have the IMF strangling any investment in infrastructure in developing countries, despite its vital component in growth, even global growth, and the additional handicap of poor credit rating, despite evidence of sustained stability.

    For meaningful growth Ghana has to look inward for investment.

  • rate this
    -1

    Comment number 9.

    in applied maths...root -1 =j therefore j squared =1, usefull in design electronics.king and his monetary clowns need to come and get some proper maths training fast.

  • rate this
    -1

    Comment number 8.

    Here in Australia, the aussie dollar has depreciated from $1.10 six month ago to $.96 today and you can't blame this entirely on the government since both countries(Australia&Ghana) are commodities base economy thus a slow down in global economy will impact the currency of both nations. Elizabeth must be fair dincum about writing issues to do with the economy of Ghana. Am really disappointed Eli.

  • rate this
    +2

    Comment number 7.

    As long as people trust governments to manage currency soundly, we will always have problems in the end. Look at Britain - the way the pound has been eroded from being gold (sovereigns) to gold-backed paper then now just unbacked paper and electronic numbers. We may pity Ghana and Zimbabwe etc, but one day we'll be just like them.

  • rate this
    +1

    Comment number 6.

    Interesting enough, Ghana had a lot of educated citizens but for 50years our politicians had fail the citizensespecially the farmers. Ghana import more than it export. No added value exports, Chinese dumping is a big issue. All that Ghanaians do is to sell but not producing. Foreign companies are not using Ghanaian Banks, not investing Ghana Stock Exchange. Poor Infracstructure ie Rail.

  • rate this
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    Comment number 5.

    Gold used to underpin a currency, but military power played a big part in the equation

    The US dropped the gold standard with Nixon and opted for money underpinned by aircraft carrier power

  • rate this
    +2

    Comment number 4.

    In a developed country, allowing the currency to depreciate is a good thing because it makes exports look far more attractive - so long as you increase benefits and help for the poorest so they do not have to suffer too much from the shock.

    In Ghana though, i have no idea if they have the fiscal tools to protect the poorest. If not, they should develop some sort of government help.

  • rate this
    0

    Comment number 3.

    UN Development Programme (UNDP) - Ghanaians spend @ 62% of their incomes sourcing food - exacerbated where rent & commuting costs are higher. Even though, figure is 1 of lowest among sub-Saharan Africa countries, Ghanaian household expenses on food is 30 X more than in developed & western countries.
    Problem: HEDGE FUNDS speculation on commodities, which artificially inflates prices.

  • rate this
    +3

    Comment number 2.

    A Journalist admits a lack of understanding as to what is going on with this currency or that currency.
    Wish all of our Business Experts and all of our Politicians would stop pretending that they know and have a solution.
    How do they stop people making money buying or selling Foreign Currency?
    Trade in Ivory is a crime.Buying & Selling money is legal.

  • rate this
    +2

    Comment number 1.

    The cedi is depreciating because our imports far exceeds our exports. The government should increase the tariffs on cheap foreign goods i.e Chinese goods and promote local manufacturing.Also,the government should increase the real interest rates to make the cedi more attractive to investors. This will stabilize the cedi.

 

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