Stronger Cedi Alone Cannot Force Prices Down — AGI President

The President of the Association of Ghana Industries (AGI), Dr. Kofi Nsiah-Poku, says the recent appreciation of the Ghana cedi is not enough on its own to trigger immediate price reductions.

Speaking on PM Express Business Edition on Joy News, Dr. Nsiah-Poku explained that manufacturers are still recovering from losses incurred when the dollar surged sharply.

“At the time that the dollar was very high, I was making losses. Now that the dollar price is low, I have to recover the loss,” he said.

Businesses Still Repairing Balance Sheets

According to him, many consumers expect prices to fall automatically because the exchange rate has improved. However, the situation facing industry players is more complex.

“Some of the reasons why prices are not dropping as expected, even though the dollar has become very steep, is one of the reasons, but not the only reason,” he stated.

He stressed that businesses are working to stabilise their finances after months of exchange rate volatility that eroded margins.

Fragile Confidence in the Economy

Dr. Nsiah-Poku also pointed to concerns about the sustainability of the current economic gains, noting that industry players are not yet convinced that the improvements are durable.

“Industry still does not think that the economy is so robust. And this is a credit economy,” he said.

He explained that manufacturers often supply goods on credit terms and may only receive payment after two to four months. That lag exposes them to exchange rate risk if conditions reverse.

“If I manufacture and give it to my customers on credit, and they pay me in two, three months, four months, and by that time, if the gain has reversed, what do I do?” he asked.

As a result, companies are cautious about adjusting prices too quickly.

“So we are very careful in trying to reduce the prices,” he added.

High Utility Costs Offsetting Gains

Beyond exchange rate movements, Dr. Nsiah-Poku highlighted persistently high utility costs as a key factor keeping prices elevated.

“And also the cost of utilities is even high, even when the dollar is going down,” he noted.

He argued that if the cedi strengthens, utility tariffs — particularly those linked to dollar-denominated inputs — should reflect that shift.

“If the dollar is going down, we expect that utility cost should also be down, because we now have a higher cost, which is balancing the gain in the exchange rate.”

Price Relief May Take Time

His comments come amid growing public calls for price reductions following the cedi’s recent appreciation.

However, for industry, the equation is not straightforward. Past exchange rate losses, fragile economic confidence, credit exposure, and high utility costs are combining to slow the pace of price adjustments

Source: Accra Business News