By 
Ghana’s exchange rate instability is being driven more by structural leakages in the extractive sector than by weak export performance, according to Joe Jackson, Chief Executive Officer of Dalex Finance.
Speaking at the 2026 Dean of Business School Lecture Series at the University of Professional Studies, Accra, Jackson said persistent misdiagnosis of the cedi’s challenges has led to policy responses that fail to address the root causes of volatility.
He noted that the Ghanaian cedi depreciated by nearly 71% between 2016 and 2024, before rebounding by about 40% between 2024 and 2025—describing the trend as a sign of deeper structural weaknesses.
Challenging the narrative that poor export performance is to blame, Jackson pointed out that Ghana has recorded trade surpluses in recent years. “The hard truth is that Ghana earns foreign exchange, but does not retain it,” he said.
According to him, while the country generates significant forex inflows from gold, oil, and cocoa exports, much of this value exits the economy through service imports, profit repatriation, external debt servicing, and capital flight.
In 2024 alone, Ghana recorded a trade surplus of approximately $5.1 billion but lost nearly $8 billion through these leakages. “In simple terms, we earn the dollars and then we send them back out,” he added.
Jackson cited the gold sector as a clear example, noting that although Ghana exported about $11.9 billion worth of gold, less than half of that value was retained domestically. He contrasted this with countries like South Africa and Botswana, which retain more value despite lower export volumes, due to stronger local participation and value addition.
He welcomed the establishment of the Ghana Gold Board as a positive step toward improving value retention. The initiative, he said, has helped centralise gold purchases, align local pricing with international benchmarks, and formalise artisanal mining—early outcomes that could significantly boost export value and sector contributions.
However, Jackson cautioned that the reform addresses only part of the problem, noting that major outflow channels—particularly service imports, profit repatriation, and debt servicing—remain largely unaddressed.
He also flagged inflation as a key internal pressure point. With inflation peaking at around 54% in 2022 and remaining elevated through 2024, he said the cedi’s purchasing power has been eroded, driving import demand, raising interest rates, and discouraging long-term holding of the local currency.
Jackson emphasised that achieving sustainable exchange rate stability will require both external and domestic discipline. On the external front, he called for policies that prioritise value retention through local participation, supply chain development, and industrialisation. Domestically, he stressed the need for fiscal discipline and prudent monetary policy to curb inflation.
He urged policymakers to shift focus from simply increasing exports to ensuring that more of the foreign exchange earned is retained within the economy, describing currency volatility as a symptom of broader structural inefficiencies.
Comments