The Bank of Ghana (BoG) is under pressure from some business groupings to relax its directives meant to discourage the use of forex in the country and stabilise the weakening Cedi against the major trading currencies.
Although the bank had previously clarified the directives, which it issued in the wake of a consistent depreciation of the local currency, the Association of Ghana Industries (AGI) and the Ghana Real Estate Developers Association (GREDA) want the bank to further relax those directives for the benefit of their respective members.
While the AGI has stepped up negotiations with the bank in that regard, GREDA has served notice that it would soon engage the bank on the matter, explaining that the directives in their current state were disingenuous to the operations of real estate developers in the country.
The directives on the foreign exchange bank, among other things, made it impossible for people to withdraw foreign currencies at the various banks. They also denounced the use of forex in the payment of goods and services, as well as quotation of business contracts in currencies other than the national currency, the cedi.
The Executive Director of GREDA, Mr Sammy Amegayibor, however, told the GRAPHIC BUSINESS that the nature of real estate business makes it difficult for operators to observe such directives to the latter hence the need for the central bank to review them or at best relax their implementation.
The concerns
While admitting that the recent directives, which were issued on February 4, were not the first of its kind by the bank, Mr Amegayibor said BoG had, in the previous instance, exempted some businesses, including those in the real estate sector, from the implementation of some of those directives.
“But that has not been the case this time round. What we want to do is to engage the bank to see how those directives can be looked at again,” Mr Amegayibor, who manages Rivonia Ghana Limited, said.
While declining to give details, the Executive Director of GREDA said a scheduled meeting between the Ministry of Finance and Economic Planning (MoFEP) and the association, to discuess the BoG directives, was called off at the last minute and was now being considered for another day.
The meeting with the finance ministry officials was to be held before a similar one with BoG top executives on the same forex issues, Mr Amegayibor added. The AGI has, however, held separate meetings with Central Bank officials on two separate occasions aimed at finding a compromise to the implementation of the new directives.
The last of the two meetings was on February 28, when President of AGI, Mr James Asare-Adjei; the Chief Executive Director, Mr Seth Twum- Akwaboah, and a host of other top executives of the association met with their counterparts from the BoG to discuss the matter.
“We are not saying that the directives are bad per se just that we think there are one or two issues that can be looked at again so that those measures, however good they are, will not damage the operations of the private sector,” Mr Asare-Adjei, told the GRAPHIC BUSINESS on March 4.
Frank discussions
The cedi came under heavy pressure from the beginning of January into February, causing the business community, including members of AGI, to ask for practical solutions that would help stabilise the cedi.
That caused the BoG, which was in-charge of the management of the monetary policy, to respond with the directives which, among other things, made it impossible for people, traders, to withdraw their forex from the banks.
The directives also made it impossible for travellers to carry foreign currency in excess of US$10,000, a rule the business community, especially those into imports, said was counter productive.
Although AGI’s President said it was too early yet to tell the posture of the bank towards the association’s requests on the new directives, he said indications were that the bank would listen to the pleas put forward.
On the outcome of the February 28 meeting, the AGI President said it went well. “We always have open and frank discussions with each side ready and willing to compromise. I think the good thing about the negotiations is that the bank is willing to listen to our side and factor our concerns into their activities.
That, to us, is welcoming,” the AGI president said, declining to give details. Although the association does not intend to meet with the BoG soon to again discuss the new directives, Mr Asare-Adjei, who owns and runs the Asadtek Group, said the negotiations with the Central Bank would continue until such a time that the rules would be adjusted to favour both sides.
“We don’t look forward to a one-time solution to the entire problem; it’s a gradual process and that is what the negotiations are supposed to do,” he added. Attempts to get the BoG to comment on the matter failed but indications are that the bank will not alter the directives soon given that they were issued to help stablise the fast depreciation of the cedi.
Any review of the directives would, therefore, come only if the cedi regains its strength against its major trading partners.
The cedi lost some 2.65 per cent of its value to the US Dollar; 0.25 per cent to the Euro and 2.75 per cent against the British Pound in the week ending March 7, according to a Merban Stock Brokers’ weekly report.
