Importers have said their capital has shrunk significantly over the past one year as the cedi continues to weaken against major trading currencies, especially the US dollar.
The Ghana cedi has depreciated against the US dollar by 9 percent to GH¢4.92 from GH¢4.43 in February 2018, the fastest rate of depreciation in four months.
This has made doing business for importers no longer exciting, as the amount of money needed to buy the same quantity of goods a year ago cannot do so today, thereby putting pressure on their capital and reducing profit margins as they are unable to transfer all the effect to consumers.
The Deputy General-Secretary of the Ghana Union of Traders Associations (GUTA), Richard Amamoo, confirmed this when he told the B&FT how the cedi-depreciation has affected his business.
“Last year [August], a full container of speakers cost me US$20,000 at the rate of GH¢4.7 to the dollar, making it GH¢90,000. But that same quantity of products will cost me GH¢103,000 using the current interbank rate of GH¢5.16. This means I need an additional GH¢9,200 to import that same container today,” he said
The importers’ plight does not end with the capital needed for importing the products. The cedi depreciation has also affected duties they pay at the ports, as that is also pegged at the current forex rate.
“And when it comes to computation of duty, Customs is using the same dollar rate for the duty. So, in effect, the duty we paid last year for the same quantity of goods has increased because of the cedi’s depreciation,” he said.
Mr. Amamoo said importers would have some respite if government computed the duties by adjusting the rate quarterly, rather than using the daily interbank dollar rate.
The Executive Secretary of the Importers and Exporters Association of Ghana, Samson Asaki, also said the currency depreciation has meant some importers have stopped importing and have channeled their capital into other things, while some have significantly reduced the volumes of consignment they bring in.
“So many people are not importing anymore. Those importing are not bringing in the quantity of products they used to. The effect is real. If you ask those who sell confectionary, for example, they will tell you they are unable to bring in the same quantity of goods because they can’t buy anymore,” he said.
Aside from shrinking capital and high import duties, the importers are also crying over low sales.
Considering that almost everything on the market is imported, the cedi’s troubles have also affected the purchasing power of consumers as general prices of products have hiked – leading to a cut in spending by consumers.
A graphic designer in Accra who is father to three children, Kwame Mante-Sarfo said: “Generally, I have cut down on many expenses as my income can no longer support such spending. There were items I frequently bought from the market, but their prices started increasing week after week and I stopped buying. Anytime I complain, they tell me it is not their fault but the dollar’s.”