Foreign exchange retention policy must be priority - GUTA to next govt

The President of the Ghana Union of Traders’ Association(GUTA), Joseph Obeng, has called on the President-elect to institute a policy that will ensure that foreign businesses in the country retain a sizable proportion of foreign exchange in Ghana to shore up the national currency and stabilise it.

He said that was the only way the cedi would appreciate against the major foreign currencies and ensure the reduction in prices of goods and services.

“We are an import driven country, if the currency is not stable, prices of goods become very high and affects the ordinary Ghanaian. GUTA’s major challenge is the exchange rate and this must be tackled head on,” he told the Daily Graphic in an exclusive interview in Accra.

Mr Obeng congratulated the President-elect and stated that a stabilised currency would have a knock-on effect on the policy rate and inflation which would enable members of GUTA to borrow at low interest rate and reduce the prices of their goods.

“One major expectation from the President-elect is also to streamline the tax system by reducing the number of taxes and charges we pay at the ports to ensure our members comply with it without cutting corners which deprives the government of the needed revenue to develop the country,” he stated.

Profit

In April 2022, the Ghana Investment Promotion Centre (GIPC) rejected calls to prevent foreign businesses from repatriating all their funds in foreign currencies out of the country after making profits.

Proponents of the suggestion had argued that such a move would prevent the cedi from falling rapidly in value against foreign currencies, particularly the dollar.

The Chief Executive of GIPC, Yofi Grant, warned that such a policy could be counterproductive and deter investors from coming to Ghana.

However, in August the same year, GUTA appealed to the Bank of Ghana to review the investment law that allowed foreigners to repatriate 100 per cent of their profits. This it believed would help reduce the pressure on the cedi.

Most multinational firms repatriate their earnings annually, a situation which affects the local currency.

The Vice-President of GUTA, Clement Boateng, also argued that some of the foreign firms and traders were importing huge products into the country,after which they did not even keep half of the proceeds.

“Foreigners are doing about 85 per cent of the imports into this country. At the end of the day, this poses a threat to our foreign reserves as they equally take all the profits out of the country; this also has to do with our investment laws which need to be revised,” he stated.

Subsequently in February 2023 the international body of association of airlines warned Ghana against any move to prevent the repatriation of profits by its members after the continent’s largest economy, Nigeria, blocked multinationals including international airlines from repatriating their profits.

It said such a move would also impact the country’s attractiveness to international investors and derail the progress made so far by the country as far as the gains made in the aviation sector were concerned.

Engagement

Mr Obeng urged the government to engage with stakeholders to make good on the import substitution policy to reduce the country’s reliance on imported goods and to increase local manufacturing.

He suggested that the government could begin by consciously and deliberately reducing the foreign dominance of the country’s markets and investing in local businesses.

“Our trading sector, both retail and wholesale, is being dominated by foreigners and that is affecting the local currency and the economy; they fly all their finances out of the country to the detriment of our local currency,” the GUTA president stated.

Mr Obeng asked the government to formulate laws that would help grow and promote small businesses in the country to help the growth of the economy.