Commodity slump cost us US$1.3bn -- Veep

Ghana lost US$1.3billion in potential export revenue last year due to price declines of gold and cocoa, the country’s biggest foreign exchange earners apart from oil, said Vice President Kwesi Amissah-Arthur on Tuesday.

 

The fall in earnings has put pressure on the country’s foreign reserves and contributed to the rapid slide of the cedi in the past year, he said, adding that cocoa and gold prices have cumulatively fallen by 20 percent and 25 percent respectively since 2011.

“Weakening commodity prices have decreased earnings from our exports, reducing our capacity to finance imports [and] thus increasing pressure on our foreign exchange reserves.”

Mr. Amissah-Arthur, who was addressing investors at the fourth annual African AmCham (American Chamber of Commerce) Summit in Accra, also worried that the rise in global interest rates, triggered by the US central bank’s slowdown in bond purchases, has fuelled currency volatility in emerging economies and threatens Ghana with higher costs of debt servicing.

His comments were made a day after Cabinet met to consider how to support fresh regulations by the Bank of Ghana (BoG) to check the depreciating cedi. The currency lost 7.8 percent in January alone against the dollar, on top of a 14.6 percent slump in 2013, according to the BoG.

Mr. Amissah-Arthur said reform of the currency market and “maintenance of an appropriate incentive structure for the country” -- which was an important element of economic reform in the 1980s – “remains a priority of government”.

“The reforms seek to restore policy credibility, stability and certainty in our economy. They also seek to enforce legal requirements for doing business and reduce the dollarisation of our economy,” he said.

“It is also to assure investors -- domestic and foreign -- we will work to create a competitive environment that assures them of adequate returns from their investment.”

The two-day AmCham conference, which has the theme “Building the American Brand in Africa”, has been described as an interactive learning and networking event for the chamber and US diplomatic representatives across the continent.

The event’s coming to Accra, according to US Ambassador Gene Cretz, is to stress the importance of Ghana for American investment and trade. “There is tremendous potential here. There should be no doubt that the Ghana and Africa brand is held in high esteem in the USA.”

He said American chambers of commerce throughout sub-Saharan Africa play a critical role in assisting and stimulating the creation of businesses and facilitating investments needed to promote the American brand.

“Chambers effectively communicate the message that American companies want to cultivate professional development and produce sustainable and equitable economic expansion across Africa.”

President of AmCham Ghana Philippe Ayivor said the local chamber is an active member of the African Business Initiative, the continent’s arm of the US Chamber of Commerce. 

“We have about 15 AmChams here [in Accra] for the next two days from various part of the continent to deliberate on investment opportunities in Africa.”

The Africa Business Initiative was set up to engage the US business community on legislative policies that foster foreign direct investment between the US and African countries, and to introduce US companies to the continent’s vast economic opportunities.