Henceforth, 30 per cent of the total amount involved in all contracts awarded to oil companies trading in Ghana, irrespective of the country they are coming from, should be paid to them in cedis, as a way of strengthening the local currency, Kojo Poku, an energy expert, has suggested.
According to Mr Poku, the same thing has been done in some African countries such as Angola, as a measure to shore up their local currency.
Speaking on Ghana Yensom on Accra 100.5FM with sit-in host Katakyie Obeng Mensah on Tuesday, 18 September 2018, in relation to the ongoing debate over the cedis performance, Mr Poku said: “If you look at the amount of money paid to oil companies operating in Ghana, you will be shocked; they are in billions of dollars. Ask them how much of those payments are made in cedis?
“When you go to countries like Angola, if a contract is given to the companies of say $100 million, 30 per cent of that $100 million is paid to that company in the local currency and that is helping their local currency.”
He suggested: “If in Ghana we give a contract of about 1 billion, we can demand that 30 per cent of that amount should be paid to the company in the local currency, the cedi. Whether the company is a Russian company or Israeli company or American company. This will help in strengthening the cedi.”
Meanwhile, Vice-President Dr Mahamudu Bawumia has said that the Akufo-Addo government under the New Patriotic Party (NPP), has performed far better in managing the depreciation of the Ghana cedi in relation to the U.S. dollar than the erstwhile Mahama-led National Democratic Congress (NDC) administration.
Making reference to data from the Bank of Ghana to buttress his point, Dr. Bawumia said: “The Cedi exchange rate increased from 1.1 to 4.2 to the Dollar between 2008 and 2016. At the time we assumed office, the cedi exchange rate was some 4.2 cedis to the Dollar. Today, if you look at the Bank of Ghana data, it is at 4.75 to the dollar. It is, therefore, absolutely clear and incontrovertible that we, as a government, under Nana Addo Dankwa Akufo-Addo’s leadership, and the management at the Ministry of Finance; and the Bank of Ghana, it is clear that we have managed the exchange rate much better than our predecessors”.
Dr. Bawumia made these remarks at the launch of the School Entrepreneurship Initiative programme at the Ghana Senior High School, Tamale, on Friday, 14 September 2018.
Critics have blamed government policies for the weakening of the cedi against the U.S. dollar.
The cedi has narrowly neared the GHS5 to $1 rate.
However, Dr. Bawumia explained that: “So far, this year, the Ghana cedi has depreciated by just seven per cent against the U.S. dollar”.
In his view, “The exchange rate between the cedi and the dollar has remained relatively stable when compared to the movements in other currencies against the dollar. The reason for this is because of the relatively stronger fundamentals that we have in our economy”.
Dr Bawumia said, for instance, that the Argentina Peso has depreciated by 50.2 per cent; Turkish Lira by 42 per cent; South African Rand by 19.2 per cent; Indian Rupees by 11 per cent; and the UK Pound Sterling by 4.2 per cent, against the U.S. dollar, hence Ghana has performed creditably by managing a seven per cent depreciation within the same period.