Crash of cedi leads to price hikes

Agona District to give favourable tax regime to investors

The first ever Kente fair opens in Accra

Accra (Greater Accra) 6 Dec. '99

Prices of most imported items are recording an upward surge as a result of the crash of the cedi against the major world currencies.

Market players interviewed said the rise in prices of commodities has been normal since the beginning of the year, but described price hikes in November alone as "abominable."

Most of those interviewed, including shop owners, market women's associations, officials of the National Chamber of Commerce, the Private Enterprise Foundation and the general public attributed the trend to the high rate and scarcity of the dollar.

The inter-bank exchange rate of the cedi to the dollar has since January increased by about 47 per cent from 2,362 cedis to 3,474 cedis.

The change in the selling rate of the dollar to the cedi between 31 October to 30 November alone is, however, 15 per cent.

It was quoted at 3,017 cedis at the end of October and finished 30 November at 3,474.36 cedis at the inter-bank level.

The Bank of Ghana says the cedi has depreciated by 20 per cent for three-quarters of the year.

This has reflected in the market prices of items, including food, building materials and fabrics.

A tin of powdered peak milk, which sold at between 6,000 and 6,500 cedis in October, went for between 8,000 and 8,500 cedis in November, indicating a 33 per cent change in price.

A provisions shop owner, Harry Nyaban said the price of milk increased every week leading to adjustments in orders and supplies.

A box of evaporated peak milk of 24 tins, which was quoted at a wholesale price of 140,000 cedis moved to between 168,000 and 177,000 cedis in November, up by 26 per cent.

Another shop owner at the Opera Square said the price of a mini-bag of rice, which sold at 82,000 cedis increased to about 90,000 cedis in the course of the year but shot up to 110,000 cedis in November.

A bag of cement has within a short period recorded a 52 per cent change in prices, selling now at 17,500 cedis from 11,500 cedis quoted at the beginning of the year.

Some dealers said despite the fact that cement is produced locally, the cost of imported components has been affected by the dollar in addition to other factors such as labour cost, high tariff and speculation.

The price of 24-inch louver blade shot up by 13 per cent, from 1,500 cedis to 1,700 cedis per blade this year; a 30-inch louver blade recorded a 22 per cent rise from 1,800 cedis to 2,200 cedis. A 36-inch blade went up from 2,200 to 2,700 cedis.

Some dealers said recent increases in fuel prices could be a contributory factor to the price hikes.

While the price of a half-inch or 12 millimetre iron rod increased from 750,000 cedis per tonne to 800,000 cedis from June to October, it shot up to 990,000 cedis within the last three weeks.

The percentage change from June to October is 32 while that of October to November is 13 per cent.

The price of a 14-millimeter iron rod, otherwise known as reinforcement rod, is now selling at one million cedis per tonne as compared to 800,000 cedis quoted at the middle of the year.

A box of nails, which sold at 30,000 cedis, is now selling at 40,000 cedis while a bundle of aluminium roofing sheets made up of 20 sheets now sells at 460,000 cedis as against 400,000 cedis quoted in June.

The price hikes, the dealers said, have affected the prices of barbed wire, plywood, floor and wall tiles and other building materials.

Representatives of the Makola Market Women's Association said high taxes, high rate of the dollar and the CFA and transportation were to blame for the high prices of cloth, provisions and household products.

A half-piece of Ghana Textiles Print cloth sells at more than 90,000 cedis while the imported Nigeria wax sells at 80,000 cedis.

The price of Akosombo Textiles Java is also selling at a higher price more than the Nigerian Java print.

They however blamed increases in fuel prices to the high cost of food items as transport owners charge high fares from farming villages to the city.

Mr Nicholas Oliveria, Warehouse Manager at Melcom, said despite the weekly increases in product prices, patronage of electronic gadgets has not slackened.

Another area, which has been affected by the slump of the cedi are the forex bureaux. An official of the Post Office Zone of Forex Bureaux operators told the GNA that they could buy 10,000 dollars with 10 million cedis a few years back, but they now have to buy the same amount with 34 million cedis.

According to the operators, transfer of money through commercial banks has "prevented the dollar from circulating" affecting their businesses adversely.

The Bank of Ghana, they said, used to grant them allocations but this has ceased for sometime now and the "only people who keep us in business are a few individuals who need to change a few hundred dollars.

"It looks as if all avenues to negotiate with the government have been closed to us".

Meanwhile, a source at the Ghana Union of Traders Association said members met this week to deliberate on the situation.

They said the high exchange rates are affecting their members who are mainly importers of car spare parts and pharmaceuticals.

Some members of the public interviewed, said they have heard inflation has gone down from 27 to 12.5 per cent but "so far as prices of commodities are still high, they believe inflation is still high.

"We can no longer afford to buy a simple cloth at Christmas and nobody knows where the nation is heading to.

"All we know is that the rate of the dollar is high and it is affecting prices of commodities on the market. Government therefore has to institute measures that will stabilise the dollar."

Officials of the National Chamber of Commerce summed up the general upward trend

in the prices of commodities as one of the effects of the high demand for the dollar and the falling cocoa and gold prices.

They described the stabilisation of the cedi in the early part of the year, as "artificial".

Distortions in salaries have not been corrected and remain far below the cost of living, they said.

In their view, liberalised economies are good but they have repercussions that require the government's participation in instituting indirect protective measures in the productive sector without necessarily leaving the exchange rates to operate freely.

An official of the Chamber who pleaded anonymity said in pursuant of a liberalised economy, the foreign exchange was allowed to operate freely and this led to excess liquidity and the resultant high rate of inflation.

"It will take a lot of determination and strong will and right measures to mop up the excess liquidity, but it is time we also looked at the issue of over dependence on external aid".

He mentioned the need to do away with over reliance on cocoa and gold and promote the export of other crops, which will equally bring in the needed foreign exchange.

He said businessmen should be educated on the need to make good use of local resources and criticised the importation of items such as "Nkatie burger."

Parry and Company limited, brokers of locally produced tuna, advised businessmen to diversify so as not, to feel the pinch of such situations.

Mr Asare Awuku, an official of the Ghana Highway Authority said Ghana and other developing countries experience negative imbalance between cost of living, salaries and productivity.

Such countries, including Malaysia have struggled to come out of the situation and this behoves government to do the same by doing all it could to bring about at least a balance between cost of living and productivity.

Meanwhile, the Governor of the Bank of Ghana has predicted the stabilisation of the cedi in the near future but some members of the public have expressed doubt that it would have any significance on the cost of living.

GRi../

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Agona Swedru (Central Region) 6 Dec '99

The Agona District Assembly will grant favourable tax regimes, within the national context, to people willing to develop the confluence of Ayensu and Akora rivers into a tourism attraction.

Mr Samuel Adu Yeboah, the District Chief Executive announced this during an investment forum at the on-going trade and investment fair organised by the Agona, Gomoa and Awutu-Effutu-Senya districts at Agona Swedru.

He said the assembly will assist investors to acquire land and facilitate the provision of utility services to industrial sites.

The District Chief Executive announced, that large deposits of gold and clay can be found at Agona Abodom and Agona Nyakrom, saying these are being presently exploited on a small scale.

The DCE called on commercial banks to turn their attention to these areas instead of investing in areas like trading.

Nana Kojo Amoakwa the fifth, Krontihene of Nyakrom traditional area assured investors of the preparedness of chiefs to release land to them on "very soft terms".

GRi../

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Accra (Greater Accra) 6 Dec. ’99

The first ever Kente fair in Ghana to expose and create awareness of the different types of the Kente cloth opened in Accra on Saturday.

The one-week fair, which has brought together about 25 exhibitors from Ashanti and Volta regions, is being organised by Hotel Shangri-La.

Mrs Frances Sey, Head of Sales and Marketing Department of the Hotel, said the fair was the hotel’s quota towards promoting art and cultural, and tourism in Ghana.

It is to encourage people to appreciate the value of hand woven Kente, its usage both traditional and contemporary and its socio-economic value.

Some of the Kente clothes exhibited include: "Sika Futro", "Fathia Fata Nkrumah", "Abusua ye dom", "Adwina asa", "Papa ye nko Akyiri" and "Kente O.K", which is a combination of African and European fabrics.

Kente cloth is an African cloth belonging to all people of African descent and an important treasure for Ghanaians.

Kente looses its traditional image if it has no name or significance and traditionalists believe that distinguished people must purposefully use them on special occasions.

Bonwire in Ashanti is noted for Kente but its origin has of late been a subject for discussion with a counter claim from the Volta region.