A MISSION WITHOUT AMBITION IS LIKE A BIRD WITHOUT WINGS.
The idea of re-denominating our national currency is laudable. It is the ambition behind our quest(mission) for economic breakthrough and international recognition as a nation. I however perceive that this important ambition has been overly conceived. The four zeros being written off is too much. Re-denomination has an implicit revaluation tendency if not properly machinated.
The problem of our currency started with the use of the thousands(000) not the hundreds(00). It would have been better and for easier calculation to write off the three zeros. If 500,000 cedis becomes 500 cedis the holder, even the old lady at Brepro, can easily imagine its previous value. Again this will better represent the Euro and the Dollar. ie 50 EUROS TO 500 CEDIS IS THE SAME AS 50 to 500,000 as before or today. But to bring 500,000 to 50 making it equal to euro and dollar is not the only problem but to get your people to easily calculate how much they are dealing with at any point in time so as to achieve the intended purpose of re-denomination as against revaluation poses a big quandary.
We do not necessarily need to print 500 cedi notes and put them in circulation. The largest could be 200 and this must be made very scarce to the public as if they don't exist. In the Europe's Euro zone you scarcely see 100 and 200 notes in the shops. Those notes only circulate among the banks. Individuals get them only when they are receiving large payments. And they immediately send them into their bank accounts. The next time I will talk about electronic ways of handling money.
When ambition is overly conceived, it drowns the mission and spells catastrophe unintended and unwanted. To be foretold is to be forewarned.
The Bank of Ghana must consider this and reshape the idea.
Q. Has anyone come across an analysis of how this redenomination fits in with the West African Eco project?
C. The US and Europe are relatively cashless economies hence the relative rarity of 100 and 200 currency bills. Ghana is not at all in the same league. Cash is very much needed for almost all transactions so making higher denominations rare is not a good idea.
A MISSION WITHOUT AMBITION IS LIKE A BIRD WITHOUT WINGS.
If the ECO project is working in earnest to take effect as we are told then there is no need to go ahead with this redenomination. WE will be forced to discard currencies we've invested so much to create and promote.
US and Europe use cash as well as electronic means of transaction. But even so the cash use is aided much by the value of the currency translated into pricing. If a TV set for eg is 50 new GhC, instead of 500 000 cedis you can easily carry this to the shop. If it is 200 new Cedis instead of 2.000.000, you will need just 4 notes of the 50 new cedis which will fit into your wallet so easily. In situations like this one may be tempted to think that there is not much cash in circulation, but there is. This is what happens in the US and EU.
I think we have agreed that we need the electronic means as well in Ghana if this program will succeed.
steveB, this guy also shares your opinion.
I also think we should shed off just three zeros to make the transition easier.
Anyway, I understand that the redonimation is up to debate till it is implemented in July. So let the debates begin.
The destiny of a nation at any given time depends on the opinions (and actions) of its young men and women.
Thank you very much Abocco, my dear brother, for drawing my attention to this important piece from Mr K. Ntiamoa. I had a firm conviction, when I was writing my own article, that this is the best way to make the project a successful one through to the future.
As of now, we are only two, ie myself and Mr Ken Ntiamoa from Canada who believe that the change should take this form instead of the original plan. We are certainly the most insignificant faction and appear to be just muttering a squeak of a mouse. But if this silent voice passes unheeded, the otherwise good intentioned mission will plunge Ghana into an economic jeopardy that no miracle can salvage.
I wonder whether decision makers bother to read anything from this site. But I believe that we have finer(almost nano)brains here to help the nation to build. A bird can only fly with wings of feathers not iron blades. I hope the best for my country. Long live Ghana.
The international value of a national currency is largely determined by the demand by foreigners for the products/services of the country concerned.
The fundamental fact: Ghana does not produce any significant high value (non natural resource) goods for the international market
So, if re-valuation occurs, the long term effect will still be 1 USD equal to 5000 GHC because Ghanaian exporters are internationally weak.
Visit any country: Brazil, China, India, Europe, America; when was the last time you saw a product/service (that is not a natural resource) with "Made in Ghana" attached?
You have made a good point and contribution, but I bet to differ with the premise of your argument. To say that Ghana doesn't produce any value-added commodity for export alone is the cause of our currency's wanton weakness is regrettable. What can you say about other African countries who also don't produce anything meaningful but still have their currencies relatively better placed in terms of rates against the dollar and the Euro?Take for eg, Bennin,Togo, and Niger-- 511 to dollar or 655 to the euro; Botswana Pula is 6 and 7 to the dollar and euro respectively; Eritrea Nakfa is 13 and 17 to the dollar and euro respectively, Nigeria Naira(in spite of all the corruption negating the oil power) is still 128 and 164 to the dollar and euro respectively. Even Rwanda. Mozambique Metical is 26 and 33 and Gambia Dalasi is 27 and 35 respectively. etc etc etc.
I have all the 53 African countries exchange rates as at 21 Nov. 2006 before me now, as I write this reply. What makes these countries better than Ghana is not their advanced technology or any industrial power. It is governments' determination to impregnate the notes with value rather than face value. This is what PNDC/NDC govt. failed to realise coupled with their lust for opulence and macro economic mismanagement brought Ghana to this abysmal posture. I was flabbergasted when I head that Kufour's govt. had also gone ahead to print 10.000 and 20.000 cedis and put them in circulation.
Let us change that 10.000 to 10 and 20.000 to 20 with the zeros written at the back of our minds. Let us spare ourselves the vicious cycle of embarrassments.
And if you will agree with me, the bigger the face value of the notes, the more useless the previous ones become.
The 10, 20, 50, 100, 200 and 500 cedi notes became worthless and had to be put into coins when 1000, 2000 and 5000 notes were printed. With the introduction of 10.000 and 20.000 Cedi notes, very soon 1000 and 2000 notes will be nothing and may have to be consigned to the coin domain; can you imagine this?
Good trade is not about exporting the most expensive commodities. Its not about bling nor high tech gadgetery Its about finding a niche in the market where there is no supply for the demand. That is where you make your presence felt and deliver the goods.
To say that producing non-natural goods is the only way forward is not true and there are a lot of products from Ghana which have got International acclaim. Even a small delicacy like Golden tree chocolates has won international awards. In my local Sainsbury and Coop supermarkets i see Bananas from Ghana sitting neck and neck to those from the Carribean. Those and many more are things Britain and other countries cannot produce so we supply them and there is nothing cheap about them...they are essentials. You only need to check out the website of the Ghana export promotions council to see the wide array of things we export and as STEVEb said, they do not devalue our currency.
THE CRINGE FACTOR! WHAT MAKES YOU THINK THAT GOD MADE THREE WORLDS AND THAT I COME FROM THE THIRD WORLD. THE ISSUE OF RACE IS GEOGRAPHICAL AND NOT A STATUS SYMBOL AND NEITHER IS MY SKIN BLACK NOR YOURS WHITE.
Just because a currency is three of four orders of magnitude in exchange rates, does not indicate weakness. I made my point about economic output as one reason for a global lack of demand for the Ghanaian currency, which is why it is valued so low. Another reason, which you briefly mention (but not explicitly) is the economic discipline of government. Bu increasing the supply of money (i.e. increasing bank note printing), the government simply reduces the unit value, i.e you need more to buy the same product, inflation, etc. etc. That is what is happening in Zimbabwe right now.
I've read the other post about Golden Tree as an example of Ghanaian export success, but frankly, Ghana needs to do far more than churn out cocoa beans.
Using Golden Tree as an example, let us look at a chocolate bar itself. Is the Ghanaian engineer involved in developing the printing ink for the logo on the packaging? Or the manufacture of the press needed to mould the chocolate? Is the Ghanaian R & D scientist in possession of the patent for the gene sequence of the cocoa seedling itself? These are the real fundamental sources of wealth, not sending bananas to a UK supermarket.
To be concerned with "embarassment" of high denomination bank notes is a non important sympton, not a cause
Yes i used chocolates and banana exports as an analogy in response to your comment that there was no sign of 'made in Ghana' goods in the countries that you mentioned. From your take on the issue i guess you would only be satisfied if we export whatever high-end commodities such as you deem fit.
I am a realist. Whether we export bankye,kokonte, abele or pawpaw or bullion and computers the important thing is that it is done well and profitably. That to me is progress. We may not be the richest country but we are not beyond redemption either.
Using the chocolate analogy once again, what will be the use of the product if we met all the criteria you stipulated but did not find the market for the product? Would you come back then and suggest that we package them in gold boxes?
I wasn't the one who said Ghana was in the dumps because we could not export non-natural products...you did.
What I want to see is balanced diversification, a sensible aim.
As for our chocolate analogy, of course, every marketer knows, if a product fails for whatever reason, (such as packaging to quote your example), you analyse your mistakes, make refinements and achieve success a subsequent time!
I'm glad you make the key point: profit. There is little margin in food exports (and explains why Europe and America subsidise their farmers). But there is margin in developing new biological strains, intellectual property in gene patents, etc. Unless I am mistaken, no such activity occurs in Ghana.
We have gold mines (which are un-profitable and explains why Newmont are reducing staff). Gold is not in-exhaustible, but the human mental capacity to learn new applications for gold are almost limitless. Yet, in Ghana right now, is there development of catalysts, anti cancer drugs or solar cooling, all possible with gold? Again, unless I am mistaken, I don't think so.
Why dont you set the pace Comrade R. You've got all the answers and the know-how on new biological strains and intellectual property in gene management etc etc. And if that is the way forward and you reckon we will benefit, then go for it. 'Ye taa wakyi dendenden' You could write a recommendation and send it to the powers that be. Ghana needs people like you. Isn't that right?
When arguments miss subject matter, arguers begin to get angry. If Comrade r. wants to introduce a new topic for discussion he is welcome and fine. But if you are talking about the proposed new Cedi notes, it has very little or nothing to do with economics and biological chicken licking. The issue is purely one of moral decency, the ability to use lower currency notes and coins to make transactions easier.
We have had a culture of discarding our lower notes any time bigger ones are put in circulation. This is avoidable waste. When 10, 20 and 50 cedis were the reigning champions in our country, we still were buying cars and other valuable properties without the fear of carrying loads of cash.
The zeros-cutting move is necessary so let's embrace it with constructive ideas. Only them can we talk about how to stabilise our new found currency which, by far, requires long term macro economic policies.
I assure you, I am in no way angry.
If you really think that new Cedi denominated notes "...has very little or nothing to do with economics...", you are sadly mistaken. Save yourself further embarassment and read the classic economic definitions of money. You will soon conclude the fallacy of your writing.
"the issue is purely one of moral decency"?? Are you serious??? If you want cash transactions in low denomination currency, you need at least sound macro economic management by government, plus micro-economic policy to foster private sector enterprise. You actually have contradicted yourself, by then writing exactly this very factor: "... requires long term macro economic policies". So there we have it. According to you, currency re-valuation has nothing to do with economics, yet macro economic polices are needed to stabilise the newly re-valuated currency...
I can tell you now: if today new denomination is implemented without the necessary economic (and therefore political) adjustment, further new denomination will be required in the future, ad nauseum.
Please gain an understanding of economics before replying and save yourself further embarassment as I've written earlier; hence the subject line of my reply :)
...but you cannot force it to drink.
I have personal experience of communication to the "powers that be"; unfortunately, such people are sometimes unable to comprehend certain proposals to move forward.
But that is democracy: you express an opinion and others are free to consider or reject that opinion.
Why are you talking as if you are standing on roof tops? Why do you find it extremely difficult to differentiate times and events? Have you ever head about the term "mens rea"? Never confuse moderating factors in research methodology with substantive factors, else you score miserable marks.
This idea of currency re-denomination has been conceived by proven economists and people with requisite economic tools, at least by African standards. Do you think they are oblivious about all these things you are talking about? NO! So you ask yourself why? And the answer is the mens rea; that is the motive behind the idea and/or act. We have already reached the 10.000s and 20.000s which we cannot reverse in a twist of the rod but we can change this huge note(s) to look more portable and convenient to carry while still maintaining the values in disguised form(10.000 for 10, 20.000 for 20) period. I wonder whether you read the speech of the Governor of Bank of Ghana; some of he notes are too broad, big or whatever you may describe it, to be conveniently accepted and processed by ATMs. This is para-economic policy not economic policy per se, just get it. check para-suicide, para-military, parastatal etc.
I never minced words when I said "it has very little or nothing to do with..." But you failed to get the phrase "Ã¯t has very little". As the idea stands, unless implementation fails there is nothing wrong impregnating the notes with their present values. That is what this discussion is trying to do, to alert the authorities about the simplest workable way.
"Mens rea" is the motive or mind/intention behind an act or omission.
I understand economics perfectly well and can proudly say am capable of managing Ghana's economy without your assistance. But you and I are not better than our present economists; certainly not.
I don't think you read all my comments on this issue, else you would have noticed that in one of them I asked the question: Why other African countries who are nowhere better than us still maintain their small currency notes and coins and appear to have better exchange rates?
Sorry to say that the powers that be will not understand you because you fail to understand them. Try to explore both sides of the coin to know where a person's description of that coin began. This is democracy, this my mind.
"I understand economics perfectly well and can proudly say am capable of managing Ghana's economy without your assistance. But you and I are not better than our present economists; certainly not."
??? Another amusing contradiction: you are proudly capable of managing Ghana's economy, yet you are certainly *not* better than Ghana's existing economists.
To answer your own question about comparison with other African countries, study their corresponding macr-economic policies. I doubt you will though, since, in your words, re-evaluation "...has very little or nothing to do with economics..."
This concludes my final post
"This concludes my final post". If I understand your statement well, what you mean here is that you are not going to comment on this topic again. In other words, this is your last post on this topic. Fine, good decision. It is good because I can only imagine you to be somebody of science background, but nothing of English literature and Economics.
The fact that I am capable of managing Ghana's economy doesnt mean am better than those who are managing it now who have not shown any signs of incompetence or failure. So, where is the contradiction? Did you study any logic in your field of study at all?
You better concentrate on scientific topics and stop trespassing on areas you are not conversant with only to create confusions.
Interesting discussion and thank you for keeping your debate clean (though it went dangerously close to unacceptable).
I'm not a moderator of the forums but one of the things I like about our community is our respect for each other even in heated debates.
Instead of trying to make the other person feel less intelligent, it's usually more useful to everyone to encourage the debate by trying to make your point from another angle. You'll realize that this approach leaves the discussion for further comment even long after you've lost interest in the discussion (browse the forums to see topics which were started months ago but occasionally receive new comments).
Nice nice--I've been following your various discussions Steveb, Omanba and r:)
You started well my friend but went astray, when you begun with this issue of PNDC/NDC debate, it's a shame. By this I mean who introduced the highest denomination ever in the history of Ghana? That is the 20,000 cedi note; with the "big six" on it. It was of course the bad economic policies and bad governance of the Kufuor government. If that is what you want to hear.
So if they have suddenly become wise to do something for the better we will all support, but when the arguement becomes PNDC/NDC did what was bad then I am afraid we will not end well Steveb.
It is on record that Kufuor at a political campaign in Accra said Ghana will "Chop" or use dollars for currence during his term. Apparently the World Bank man Acquah told him that because Ecuador had doen it, during his time at the World Bank. Did that country succeed I will tell you later or you may serch for the answer.
This only means that the President, Kufuor just wanted to statisfy his gut without any meaningful thought, but just with the waste of tax payers dollars.
Research tells us that historically redenomination or sometimes disguised revaluation decisions had no logic for implementation. But mostly had been more political reasons to implementation than economic decision, and most likely go wrong. I supggest you trace the records the world over from since the 1960s to today.
The second point I can assure you is that many who started with such kinds of redenomination found their countries in a spiral of redenominations. The sad thing is some resorted to further redenominations as early as after two years of a first redenomination.
Also considering the quantum of money that is stolen in the process by governments during redenomination or huge sums of monies are unaccounted for. So the party in power gains tremenduously.
If redenomination will be done, the government of Ghana should wait to redenominate in July 2009 and not July 2007. That way all the research on impact and effect on the social, psychological, political and economics aspects would have been catered for sufficiently.
May be at the end of the period it may not even be neccessary at all. Again, it is an issue of not only the zeros but more IMPORTANTLY the timing of it, if we really mean independence of the central bank. This way we will also build CONFIDENCE.
What is the sense spending so much on the new redenominated currency only to join the CFA or francophone currency union in 2007, then in a few years, say 2009 just waste another money joining the ECO (Ecowas monetary union)? Lets keep the ball rolling on the DEBATE. I hope the BoG and government will learn some lesson.
If BoG wants Ghanaians to carry less money, it should be heavily promoting the use of debit cards. What happened to sikacard?
LET US INVEST IN OUR COUNTRY.LET'S BUILD OUR BUSINESSES & INDUSTRIES (SMALL,MEDIUM,BIG). LET'S PROTECT OUR NATURAL RESOURCES. LET'S SPEAK UP! LET'S CHALLENGE THE STATUS QUO.TOGETHER WE CAN MAKE GHANA A BETTER PLACE.YEN ARA Y'ASASE NE! GOD BLESS GHANA!
Thank Gina for the link.
I embedded the video here for people to watch.
I love the song and it seems the campaign is catching up. The video is shown on Ghanaian television several times each day.
I don't know what happened to Sika card but debit cards are more popular in Ghana than they were a few years ago. A lot of the local banks have introduced such services and there's a good number of ATMs in Accra, at least.
A lot of people who I know have the debit cards hardly use them though, they prefer to write checks.
News about people changing cedis for CFA
[quote]Aflao, May 9, GNA- With just a month and a half away from the re-denomination of the cedi, skeptics, in anxiety are rushing to change their cedi notes into CFA in Aflao and parts of Lome in anticipation of the change.
Some Togolese and other nationals mainly Nigerians resident in Lome who are having cedi holdings in banks in Ghana mainly at Aflao were also said to be withdrawing their savings and buying CFA notes. Dealers in currency in both Lome and Aflao confirmed to the Ghana News Agency (GNA) on Monday that they have since the beginning of this month witnessed an unusual high demand for CFA notes in exchange for cedis.[/quote]
[quote=paa.kwesi]Q. Has anyone come across an analysis of how this redenomination fits in with the West African Eco project?
This is to continue the Eco and new Ghana cedi discussion. The Eco was in the news and a friend blogs about it here
[quote]Today news is the launch of the ECO in december 2009 to serve as one currency for a " unified market of over 210 million people spread over 16 member countries with a GDP of over $100 billion and per capita of over $8000".
As an business person in Africa such development can only but bring positive expectations for the future.
These nations would have to coordinate their fiscal,labor and investment policies to a certain degree. To remove the headache to start over everytime you move from one country to another would boost foreign and intra Africa investments .[/quote]
Gkdapaa, I saw your Q & A about the GhC, but can you help us with how the GhC would fit in the Eco project?
This is an interesting question, Paa Kwesi. I have been trying to figure out how the two would co-exist in Ghana. It's not that i have any big worry about Ghana using 2 currencies, but i am curious to know the plans of Bank of Ghana (BoG) about the GHC and the ECO.
I would try to communicate with BoG to get some clarifications. If i get some answers (very unlikely), I would share with Ghanathink.
Gyasi K Dapaa