Re-denomination will bring benefits-Says Chamber of Commerce

Story: Boahene Asamoah

THE Ghana National Chamber of Commerce and Industry (GNCCI), the umbrella body of traders and industry in the country, has thrown its weight behind the intended re-domination of the cedi, saying “it has considerable benefits for the business community and the general public”.
A statement issued by the chamber and exclusively made available to the Daily Graphic, said following extensive discussions between officials of the Bank of Ghana and the GNCCI, it was clear that the re-denomination of the cedi would come with considerable benefits.
“The chamber, therefore, fully supports the re-denomination exercise,” the statement said.
The chamber said the re-domination would reduce the high transaction costs of businesses in the country.
It explained that a lot of time was spent in counting money, especially when it involved smaller denominations. That, the chamber stated, often happened not only in financial institutions but also in day-to-day business transactions as a result of the cash-based economy of the country.
“Re-denomination will, therefore, save time and introduce efficiency into day-to-day transactions,” it said.
“With the advent of the new Ghana Cedi ATM and other payment systems are likely to improve”.
The chamber stated that some challenges that its members faced were proper book keeping and statistical records, which the chamber said, the exercise would help to address as fewer figures would be dealt with. It added that the re-denomination would also help to set a realistic exchange rate.
The chamber said the re-denomination would mean that if the present exchange rate is $9200, then the new Ghana Cedi will be $1=GhC 0.9200.
“This will help to boost the level of confidence in the economy since it creates the impression that the local currency is strong in relation to other currencies and because one does not need too many of it to exchange,” the chamber stated.
Again, the chamber said, the exercise may be successful in assuring investors, both local and foreign, that the economy was stable and expected to remain so in future.
On the West African Monetary Zone (WAMZ), the chamber said the exercise would give the country a better bargaining power.
It said with a weak currency such as our current cedi, the country was not only finding it difficult to meet the convergence criteria, but when she eventually entered the ECO zone, it would have a weak bargaining power of convertibility.
The chamber, however, drew the attention of the authorities to some challenges that were likely to affect the exercise.
That included inflation, which the chamber urged the government to tackle seriously.
It said in the case of Ghana, the Consumer Price Index (CPI), which is heavily dependent on food production and consequently the weather, which was outside the control of policy makers, could push up prices.
The chamber said one of the problems likely to be encountered would be the distortion of market and prices since the prices of goods and services may not fall by the same proportion as the exchange rate between the old and new currencies.
It said there was the need for effective public education to ensure that people do not go to the villages and less literate communities to mislead the people, take away their hard earned currencies and replace them with counterfeits in the name of helping them acquire the new currency.
“We would, therefore, urge the authorities to review literature thoroughly to understand how countries that have previously re-denominated fared and learn from their strengths and weaknesses”.
It said in order to ensure the success of the exercise, the authorities should work towards the introduction of non-cash payment instruments, such as “Credit Cards” in order to minimise the current incidence of cash transactions in business.
In addition, it said the law on cheque issuing facilities must also be rigidly enforced to penalise issuers of “dud cheques”.
“The chamber is prepared to collaborate with the Bank of Ghana in the education campaign to give credibility to the rationale for the exercise. It is also prepared to collaborate with the bank in any other project that will really improve commercial and industrial activities in the country,” the statement concluded.