The Association of Ghana Industries (AGI) says the devaluation of the Chinese currency, the Yuan will negatively affect Ghana’s manufacturing industry.
[contextly_sidebar id=”RGIcrJkyeXFFiEhHtk2u3mjHoDsgMplk”]According to the AGI the move is likely to push some local manufacturers to fold up.
China’s central bank last month, devalued the Chinese Yuan, the move ignited a wave of worry among Ghanaian businesses especially those in the manufacturing sector.
Speaking to Citi Business News Chief Executive Officer of the Association of Ghana Industries Seth Twum Akwaboah said the devaluation of the Chinese currency is a source of major concern for manufacturers in the country.
“I think we should not ignore the potential effects of the Chinese devaluation of the currency on our economy. This is because a lot of our people do business in China and therefore changes in their exchange rate regime will affect us. Generally speaking business leaders are worried because you are doing business in such a country then it means that products are going to be much more cheaper and already China is a big threat to a country like us because they are better advanced in technology than us and then also we have not put in place the needed policies to prevent the influx of cheap and substandard goods entry to our market.”
We as a country have issues with under declaration which allows people to bring in goods anytime at a cheap rate than local sources and that is already a challenge and therefore any effort to make imported products cheaper than locally produced ones is a big threat to the Ghanaian manufacturing market, Seth Twum Akwaboah said.
The Chinese in a bid to boost its economy following the decline in its growth devalued its currency the Yuan to make its exports more competitive.
Ghana is an import based economy with majority of its imports from China and China’s move to make its exports more competitive mean goods from China will be much cheaper than before and Ghanaian businesses are likely to increase their demands.
This means there will be more demand for foreign currency to purchase these goods in this case the dollar which means demand for the dollar will outweigh supply which ultimately will hurt the cedi.
By: Norvan Acquah – Hayford/citifmonline.com/Ghana