BTA2023 The recent appreciation of the Ghana cedi may be encouraging for macroeconomic watchers, but manufacturers say it is too early to expect price reductions.
Dr Kofi Nsiah-Poku, President of the Association of Ghana Industries (AGI), has cautioned that producers are still recovering from significant losses incurred during the period of currency weakness.
Speaking on PM Express Business Edition on Joy News, he explained that many manufacturers absorbed losses when the dollar surged sharply.
“At the time that the dollar was very high, I was making losses. Now that the dollar price is low, I have to recover the loss,” he stated.
Why Prices Are Not Falling
Dr Nsiah-Poku stressed that exchange rate movements are only one factor in pricing decisions.
While the cedi’s recent gains are welcome, he said industry players are not yet convinced that the economy is strong enough to sustain the currency’s current position.
“Industry still does not think that the economy is so robust,” he noted.
He added that Ghana’s structure as a largely credit-driven economy complicates matters. Manufacturers often supply goods on credit terms and receive payments months later.
“If I manufacture and give it to my customers on credit, and they pay me in two, three, or four months, and by that time, if the gain has reversed, what do I do?” he asked.
That uncertainty, he explained, makes firms cautious about reducing prices prematurely, especially if the cedi’s gains prove temporary.
Utility Costs Still High
Beyond currency volatility, Dr Nsiah-Poku pointed to persistently high utility tariffs as a major burden on production costs.
“The cost of utilities is even high, even when the dollar is going down,” he said.
He argued that utility tariffs — particularly those influenced by foreign-exchange inputs — should reflect the stronger cedi.
“If the dollar is going down, we expect that utility cost should also be down, because we now have a higher cost, which is balancing the gain in the exchange rate.”
Stability Over Short-Term Gains
The AGI president’s remarks highlight the delicate balancing act manufacturers face — navigating currency fluctuations, credit risk exposure, and rising operational costs.
While the cedi’s appreciation may signal broader macroeconomic improvements, industry leaders say what matters most now is sustained stability rather than short-term currency movements.
For consumers hoping for immediate price relief, the message from manufacturers is clear: recovery comes before reduction.
