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Kufour’s Re-Denomination Of The Cedi Ghana’s Biggest Financial Scam

By Yusif Gariba
Opinion Kufours Re-Denomination Of The Cedi Ghanas Biggest Financial Scam
SEP 17, 2018 LISTEN

Kuffour's re-denomination of the cedi in 2007 is one of the monumental fiscal scams that have hit our nation Ghana. Every time there is a devaluation of the cedi relative to the dollar, the gravity of the situation is hidden and put out of the national and international monetary debate circles. People are likely to find it less debilitating, when say the cedi falls to 7 cedis to a dollar and recorded as such, as opposed to the depreciation being recorded as 70,000 cedis to a dollar.

A SHORT ACCOUNT OF THE CEDI’S DEPRECIATION DEVALUATION.

Dr. Busia was the second to devalue the cedi in 1971, after it was first devalued in 1967. His devaluation of the cedi formed the genesis of the series of events that led to his overthrow the following year in 1972 by col. I.K Acheampong. He was overthrown because the devaluation of the cedi led to unprecedented hardship in the country. The country came to the brink of collapse, so his overthrow came as a good riddance to Ghanaians.

Under Busia, the cedi went from ¢1.02 to $1 to ¢1.8 to $1 dollar. Following Busia’s trajectory was Gen. Akuffo who deposed Acheampong in a palace coup in the beginnings of 1978. He further devalued the cedi to ¢2.75 to $1. He was overthrown and killed alongside others such as Acheampong and Afrifa etc. by J.J Rawlings, for the hardship that resulted that same year and the years before it. They were tagged as corrupt.

Then the year of Ghana's Armageddon soon came; that's the year of our lord 1983! During that year, Ghana experienced so much hardship and suffering because they economy was in a great disarray. Never do I think this particular moment in the history of Ghana, can ever elapse from the memory of Ghanaians, not because of the hunger but more importantly, the period of extreme hardship they followed. We have all heard of this Twi phrase, '83 kom'. It is very quintessential to the experience of the time.

You can ask your parent or any elderly person about that sordid past. To try to end the suffering, Rawlings to succumbed to the IMF. That's where the cedi moved from 'frying Pan to fire! Rawlings, against the wish of Ghanaians, placed Ghana under IMF's structural adjustment policies and austerity measures.

The exchange rate further plunged from ¢2.75 to $1 to ¢30,000 to $1. That's a depreciation of more than 1 million percent, and I’m not exaggerating or engineering the figure, do the math if you want.

THE ECONOMIC MAGICIAN TAKES OVER
Then in 2000, Kuffour came into the picture. He didn't do much to salvage the drowning cedi. Perhaps there was nothing much he could do, his first point of call after taking over was the IMF to the declare the nation Heavily Indebted And Poor Country (HIPC). With that right there, he seeded the control of Ghana’s economy to the IMF.

Instead of matching the currency problem squarely, he hid it from the public domain, especially from the millions of Ghanaians without economic spectacles. But a problem never solved always rears its ugly head to haunt you later. And how did kuffour manage hid the problem? I will tell you!

Some 11 years ago, in the month of July, Ghana woke up one day to a chorus that ran through all the media houses. The bank of Ghana had re-denominated the cedi for some ridiculous reasons I won't bother to mention. Now to everybody's surprise, ¢10,000 magically became equal to ¢1.They knocked off four zeros. So the cedi to dollar ratio magically went from ¢10,000 to $1 to ¢1 to $1. An exchange rate as such should have been reflective of the economy. But the economy then, was nothing to write home about. It was characterized by a large BOP deficit, which signifies that the country consumes way more than it produces. Is the economy any different today? They would tell you we are running a BOP surplus, but it’s a fabrication. This is a discourse for another day.

Even with kuffour’s fabrication, the depreciation of the cedi continued unabated. To say the least, the measure was not aimed at stopping the depreciation but to hide the gravity of situation from the public domain. Some hero-worshippers even claim kuffor left office with the cedi strong as the dollar, what an utter lie!

Now we are told the exchange rate is ¢5 to $1. But it is actually ¢50,000 to 1$. It cedi in real terms, is worse than the Naira, the Kwacha, the Rand, the CFA, the dinar and many more African currencies. That how bad our currency is!

The NPP government has failed just like all its predecessors after 1967.

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