President of the Association of Ghana Industries (AGI), Dr. Kofi Nsiah-Poku, says the recent appreciation of the Ghana cedi is insufficient to trigger immediate price reductions, as manufacturers are still recovering from heavy losses incurred during the period of currency weakness.
Speaking on PM Express Business Edition on Joy News, he explained that when the dollar surged, many manufacturers absorbed significant financial shocks.
“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 said.
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Exchange Rate Only One Factor
Dr. Nsiah-Poku stressed that exchange rate movements are just one component of pricing decisions.
“Some of the reasons why prices are not dropping as expected, even though the dollar has become very steep, is one of the reasons, but not the only reason,” he noted.
According to him, uncertainty about the durability of the cedi’s gains is a major concern. Industry players are not fully convinced that the economy is strong enough to sustain the currency’s current trajectory.
“Industry still does not think that the economy is so robust,” he said.
Credit Economy Complicates Pricing
He explained that Ghana largely operates as a credit-based economy, which complicates pricing adjustments. Manufacturers frequently supply goods on credit terms and receive payment months later.
“This is a credit economy. 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 exposure to potential exchange rate reversals, he said, makes businesses cautious.
“So we are very careful in trying to reduce the prices.”
High Utility Costs Still a Burden
Beyond currency dynamics, Dr. Nsiah-Poku highlighted persistently high utility costs as another factor limiting price reductions.
“The cost of utilities is even high, even when the dollar is going down,” he said.
He argued that utility tariffs — especially those linked to foreign exchange inputs — should adjust in line with improvements in the exchange rate.
“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
His remarks underscore the delicate balance manufacturers face amid currency volatility, credit risk, and rising operational costs.
While the cedi’s appreciation may reflect broader macroeconomic improvement, Dr. Nsiah-Poku maintains that sustained stability — not short-term currency gains — is what will ultimately create room for meaningful and lasting price reductions.
Source: Accra Business News
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