Dear Dr. Wampah,
I trust you and your teams at the central Bank of Ghana are keeping well. I refer to the subject and wish to bring to your attention some policy proposals I believe and think will tame the fast appreciating dollar against our currency, the Ghana Cedi.
I have read and heard a lot of arguments about why our currency is depreciating so fast and quick against the dollar. I have also read several of your policies in taming the dollar but to no avail. Unfortunately, we cannot continue like this without a concrete and long-term solutions.
Before I move forward and lay down my policy suggestions, I will like you to spare me a moment to state something Dr. Napoleon Hill said in his book "Laws of Success", and I quote:
"Capital is ready for those who can create the practical plan for using it’’.
This saying is very much clear and for that matter there is no need explaining it further. Now, let’s go back to business.
Dr. Wampah, one may ask, why the currently is depreciating so fast. To me, it is a simple issue of demand and supply and not what I have read and heard people say that it is mismanagement of the economy by the Government. The simple issue is that, Bank of Ghana just does not have the dollar power in its reserve for supply to hungry importers, myself included. This situation has created so much space for currency speculators, black market dealers and Forex Bureau owners to be holding the country to ransom.
I have read your reactions recently on how you and your team at the bank plan to resolve this challenge. One is to supply $20m daily into the money market. The other is to wait for the Cocoa Syndication Loan and that of Eurobond plus some inflows from the World Bank in order to slow the depreciating of the cedi.
I have analyzed your plans carefully and I think these are just short-term measures that will make the problem resurface again after a short period of time.
Injecting US$600m monthly into the system is not enough because you and I know too well that, we will need close to US$2billion monthly to import goods and services into the country.
My suggestion is that, don’t bank your hopes nor waste time and precious energy on pumping US$20m daily nor waiting for Cocoa and Eurobond monies to hit the reserves before stopping the free fall of the Cedi.
Below, you will find my policy proposals that I think will work perfectly without scratching your heard.
1. The policy should be to urgently and ASAP partner and license some investors to set up in Ghana what I will call an ‘’FX/FC Bank’’ in a PPP arrangement. These investors will inject the needed US$2bn monthly immediately into the reserve for 1% commission per month.
This means, these investors will generate 12% of revenue per annum, which will then translate into US$240 million, which is taxable. This cash is too good for these investors that they will not hesitate coming to set up an FX/FC Bank. The question now will be "who pays the 1% commission per month for the $2bn"? The answer is the dollar users, mainly importers. This means for every amount of dollar bought from the banks in Ghana, there must be a 1% commission charge paid to BoG accordingly.
If I need to import goods worth $10,000 from China, there must be a $100 BoG commission charge. The cost is billed directly to me the end user (importer) and not the commercials banks. With this system in place, we can easily cut the rate to $1 to GH¢2 all year round without anybody fearing for exchange rate fluctuations.
This policy of taming the dollar will save both importers and the country more than US$1billion per annum. I think and believe very strongly that it is cheaper and better for us to lose $240m per annum than to lose more than US$1billion per annum. Mr. Wampah, you and I know what US$1billion can do for this country.
2. The second policy will be to raise the capital requirement for Forex Bureaus to at least $20m or entirely close them down. By this policy, there will never be a black market anymore and it will make it very difficult for people to be holding dollar at home and offices. I don’t believe any right-thinking person or businessman will want to keep more than $100,000 cash at home.
3. The third policy will be to start taxing FC/FX accounts held by individuals and corporate organizations. We must know that anybody who keeps a dollar account with cash in it is surely adding value to the money and therefore must pay a value added tax (VAT) of 17.5% per month for any amount held in the account. The rule must also make it difficult for people to withdraw dollar from same account cash but rather in cedis unless you are buying or importing goods and also for travelling purposes only.
This policy is to discourage people from opening FX/FC accounts when they actually do not need it. The policy is to encourage people to buy dollar at the banks only when they need it with the assurance that there is enough for supply anytime and anywhere with the banks.
Thanks for your time reading this letter and I hope you will implement the policies in order that we can bring back our cedi soon.
Regards and God bless
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