Why We Aren’t Seeing Reduced Prices Despite Strengthening Of The Cedi: Traders And Importers Explain

Traders and importers have shared the nuances of pricing, as Ghanaians call for reduced pricing to accompany the strengthening of the cedi

It has been three months of general foreign exchange stability, with the cedi strengthening against the dollar and other foreign currencies.

The cedi is one of the best-performing currencies in the world and is trading close to GHS10 to a dollar for the first time in over two years.

Bloomberg named the cedi the world’s best-performing currency earlier in May. Finance Minister Dr Cassiel Ato Forson hailed the improved performance of the Ghana Cedi, calling it a remarkable turnaround.

This has translated to cheaper fuel prices and a welcome reduction in commercial transport fares.

However, there has been some latent discontent because this stability has not translated to reduced prices of goods in markets, especially because Ghana is an import-dependent economy.

Reindolph Afrifa-Oware, a spokesperson of the National Tenants Union of Ghana, has, for example, noted that the stability should even translate to housing.

"There must be a total reduction because if the cost of material is coming down, why should you price a property in that manner?"

"We need a total reduction in the cost of living and the cost of rental accommodations, which will make people live freely.”

David Amoateng, the President of the Traders Advocacy Group, acknowledged that Ghana is a free market in this regard.

"Nobody can force any trader to reduce prices, but we can only plead… it will be unfair if you say everybody should reduce each of their prices."

As the Cedi strengthened, trader groups said prices of goods will see reductions in July.

The Ghana Union of Traders Association and the Association of Ghana Industries (AGI) met with the government over matters relating to forex and pricing on May 14, when this time estimate was given.

Although prices of goods remain relatively unchanged, the Ghana Union of Traders Association and the Association of Ghana Industries explained that there is a natural lag between changes in the exchange rate and price adjustments on the market due to older stock acquired at previous, higher rates.

But Amoateng noted that there are other business reasons why prices have not dropped. Key among them are the kinds of funds used to finance imports.

Some traders import goods with credit facilities and are more amenable to flexible pricing.

“I enjoy a 120-day credit facility. People in this bracket, as soon as the dollar comes down, we can reduce our products,” he noted.

However, the majority of importers rely on bank loans to make purchases, which were done at high forex rates, said Amoateng. He thus surmised that expecting widespread reductions in prices at this point will be unfair.

Sampson Asaki Awingobit, the president of the Importers and Exporters Association, also does not expect significant price decreases. He, however, believes there is enough stability to open doors for price reductions.

Awingobit thus made calls for traders to reduce the prices of their goods, if for nothing at all, in support of fellow Ghanaians. He believes it is important that traders translate the forex cushion to consumers.

"There is room for you to reduce your price because gone are the days when one will have to pick up a phone to confirm the rates before we can go ahead to price goods," he said."We are selling it to our brothers and sisters. We are not selling to any foreigners.”

To ensure continued stability, Awingobit suggested a fixed rate at the ports to help maintain forex cushions for importers.

"Can we say at the outset, it's going to be 10 cedis for four months, so importers can plan and make projections? If they give us a fixed rate at the port, we’ll see it reflected in sectors of the economy.”

Source: YEN.com.gh