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Ghana’s Cedi Is Under Stress; Halt Black-Market Trading Now – Monetary policy Analyst Tells BoG

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A Monetary policy Analyst and Finance Lecturer at Regent university College Mr Patrick Yankey has applauded the Bank of Ghana (BoG) for cautioning the public not to engage the services of some 19 unlicensed entities for loans.

He said that, “the activities of these unlicensed entities amount to non-adherence of the consumer protection requirements and an abuse of customers’ data and privacy laws.

 

According to Mr Yankey, one of the core function of Bank of Ghana is licensing regulation and supervision of non-bank institution such as saving and loans, Microfinance and any other finance houses in Ghana.

 

He said, it is therefore the responsibilities of Bank of Ghana to ensure that any company that want to operate as money business in the country have license.

He revealed that these unlicensed entities mostly employ the use of mobile applications and social media in their operations which also against the law.

Mr Yankey told the host of Akyem Aboabo based Ahenkan FM’s flagship breakfast show “Maakye”, Obouba Ofori Amanfo , the Bank of Ghana have learn a lesson from what happened between 2007 and 2020, where some financial institutions were operating without license and if it was not the intervention of government to invest an amount of over  25 billion Ghana cedis  for clear – up the banking sector  by now they [unlicensed entities] have taking a lot of people’s capital and runway.

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According to him, “the move taken by government was to secure the funds of depositors, as well as, strengthen the financial sector but it is part of the reasons why Ghana is in crisis today.

 

He encourage the leadership of Bank of Ghana to continue the exercise day- in and day-out to make sure that all the financial business are working under the rule and regulation governing them.

 

 

 

Why is the cedi depreciating so fast?

 

The depreciation of the cedi has always been seasonal. It’s at its worst between February to March. This is the period during which Ghana-based multinationals repatriate profits. Also, local businesses that had imported goods on credit ahead of the Christmas season settle their debts. These are the major causes of the cedi depreciation.

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And the fundamentals have not improved significantly over the years.

 

The exchange rate was quite stable, especially during the peak of the COVID-19 period (2020-2021), because imports slowed due to border closures by most countries. But as of 28th February 2022, the Ghanaian cedi was the worst performing currency among 15 top currencies in Africa, depreciating by 7.6% within the first two months of 2022.

 

Reacting to the cedi depreciation,  Mr Yankey noted that, Ghana is an import-dependent economy and because of this, the country continues to buy foreign currency to meet its import demands, with less supply of foreign exchange from its exports. Sometimes, the country records a net gain with exports earnings exceeding import costs, but these are paper gains. The actual money is repatriated by the foreign companies that operate in the country. The retention law is not effective to restrain them from repatriating all their profits.

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He said that the long-term solution is for the country to industrialise, add value to its exports, increase local production and cut down on imports so that there will be enough foreign exchange in the country.

The government’s policy of modernising agriculture, and the one-district-one-factory should be improved to speed up the process of industrialisation.

 

Mr Patrick Yankey also urged the Bank of Ghana to halt black -market trading in country immediately to stabilize the Ghana cedis.

 

“What about the black market  which has now become legal in the country  but it is illegal, it has become participant in the foreign marker, the black marker is one of the major contribution factors of the cedi depreciation therefore Bank of Ghana has to stop the black -market activities immediately otherwise cedi depreciation can nerver be stabilise

 

 

 

Watch the full interview below

 

 

 

 

 

 

 

 

 

 

 

 

Thanks for reading from TodayGhanaMedia.com as a news publishing website from Ghana.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Source:  TodayGhanaMedia.com

 

 

 

 

There are four types of content published on  TodayGhanaMedia.com  daily: curated content; syndicated content; user-generated content; and original content.


 

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