Will Ghana’s Export Sector Collapse if the Cedi Reaches Parity with the U.S. Dollar?

The prospect of the Ghanaian cedi reaching parity with the U.S. dollar—a 1:1 exchange rate—has sparked debate about its impact on Ghana’s economy, especially the export sector. While a stronger cedi makes imports cheaper and can help reduce inflation, it also risks making Ghanaian exports more expensive on the global market.

When the cedi appreciates, key exports such as cocoa, gold, and locally manufactured goods become costlier for foreign buyers, potentially lowering demand and export revenues. At the same time, cheaper imports could flood the local market, threatening domestic farmers and manufacturers who struggle to compete with lower-priced foreign products. This could lead to job losses and slow industrial growth.

However, this scenario doesn’t necessarily mean the collapse of Ghana’s export sector. With well-designed policies, the country can turn this challenge into an opportunity. Investing in value addition and diversifying export products will boost competitiveness. Protecting local industries through tariffs, subsidies, and “Buy Ghana” initiatives can also help. Additionally, savings from cheaper imports and reduced inflation can be used to build foreign reserves, pay down debt, and invest in infrastructure.

Promoting import substitution by developing local production and managing exchange rate changes gradually will also strengthen the economy. Finally, focusing on education, innovation, and improving the business environment will help Ghana sustain growth and competitiveness in the long term.

In conclusion, with strategic planning and policy action, Ghana can benefit from currency parity while safeguarding its export sector.

Author: Abban Stanley
Master of Philosophy in Economics
[email protected]