Ghana’s economic challenges resulting from the depreciation of the cedi

The impact of the cedi’s depreciation on a weekly basis is not new to Ghana’s economy and its people, yet Ghana’s economic challenge as a result of the daily depreciation of the Cedi has long-lasting effects on the country and its people.

As of Monday, February 3rd, a dollar to Ghana’s local currency, the cedi, is GHS 15.32. This shows how the dollar is appreciating marginally while the cedi battles against some major trading currencies. Bank of Ghana’s (BOG) January 2025 summary of the Economic and Financial Data report shows that the Cedi has weakened by 2.4% against the US Dollar, 3.0% against the Euro and 0.8% against the British Pound.

The US Dollar to the Ghana Cedi exchange rate at Aboki Forex Bureau for buying is GHS15.45 and selling for GHS15.90, respectively, during this publication. The forex bureau exchange rates are unstable and may increase in value as time goes on.

The weakened cedi against these currencies will continue to cast a long shadow across the government operations, businesses, entrepreneurs, and consumers.

Impact on the Government

The government, as the largest and main participant in the economy, remains notably prone to the exchange rate volatility. The high depreciation rate in December 2024 increased debt-servicing costs for Ghana’s external borrowings, which constitute about 56% of the country’s total debt stock. Ghana also spent over GH₵40 billion servicing external debts, as reported by the International Monetary Fund (IMF) in their December 2024 review. This has also reduced the purchasing power of the government, making it challenging to provide essential goods and services.

Impact on Entrepreneurs and SMEs

Small and medium-sized enterprises (SMEs) are obviously the backbone of Ghana’s economy, accounting for 70% of the employment and 92% of registered businesses, but in January 2025, numerous SMEs operating in sectors such as agribusiness, hospitality, and retail reported 7% in their operational costs compared to January 2024. Kofi Mensah, an entrepreneur and owner of an agro-processing startup in Kumasi, expressed a concern over the increase in machinery import costs, which ate into his profit margins by 11%. Their struggles have resulted in slow economic growth.

READ: US Dollar to Cedi Exchange Rates Out: How Local Businesses Can Use Daily Exchange Rates

Impact on citizens and consumers

The Cedi depreciation has also affected citizens and consumers. This is through the continuous price increment on goods and services. Transportation fees increased by 18% in January 2025, which resulted in a high cost of living together with household budgets. For this reason, citizens have been negatively affected by the Cedi’s depreciation.

Addressing these challenges of the Cedi depreciation requires the intervention of bold policy and a collective national effort to build a stable national economy. Adaptability and prudent financial management will be critical in navigating the uncertainties of Ghana’s economic landscape for businesses and individuals. As Ghana moves forward, stabilising the Cedi will remain at the heart of the country’s economic agenda