Tag: John Mahama

Blog Series, Ghana's Political Economy, Ghanaian Politics, Political Satire & Fiction, Politics, The Bandage Economy

Episode One: The Fall of the Cedi

Dr. George Asiamah

The drums of Agyakrom Arena rolled, and the crowd gathered. In the red corner stood Cedi, the wiry fighter of the land. He wasn’t the tallest, nor the strongest, but he carried cocoa in his fists, gold in his teeth, and oil dripping down his back. The people chanted his name, believing their warrior could at last tame the mighty giants.

Behind him stood his commander, the NPP Marshal, decorated not with medals but with slogans stitched into his uniform: “Battle-Tested Plan,” “Dr. Fundamentals,” “One District, One Factory.” His sword gleamed with promises; his shield shone with borrowed optimism.

“Forward, Cedi!” the marshal shouted. “This is your destiny.”

But the battle was no village wrestling contest. Across the arena, three giants lumbered forward: Dollar, broad-chested, carrying oil barrels in one hand and global invoices in the other. Pound, dressed like a retired colonial officer, cane tucked under his arm, school-fee receipts in his pocket. Euro, tall, sleek, marching in formation with twenty-seven foot soldiers holding briefcases of regulations, machinery, and pharmaceuticals.

The whistle blew.

Dollar swung first, a heavy punch from crude oil imports. Cedi staggered. Pound jabbed with spare parts and tuition fees, cracking his ribs. Euro didn’t shout; he suffocated him quietly with wheat, vaccines, and machinery. The crowd gasped as Cedi stumbled, his shield splintered, his armour cracked.

“Hold the line!” the marshal cried. But the line broke. Cedi fell face-first in the dust, groaning, the flag of Agyakrom trampled beneath him.

The people looked at each other in silence. The trotro mate muttered: “So, this is the plan?” A Makola trader shook her head: “Even my tomatoes are ashamed.”

The giants didn’t even boast; they simply stood over him, as if to say: “This is what happens when you enter the ring unprepared.”

Proverb

“Sɛ nsuyire ba a, ɛna yɛhu deɛ ne kodoɔ yɛ papa.”
(When the floods come, we see the quality of the canoe.)

Policy Reflection

When global storms hit – rising oil prices, higher imports, currency shocks – Cedi revealed what had long been hidden: an economy built on weak planks. The canoe had been painted with slogans, but its wood was cracked. Imports outpaced exports, debts outpaced revenues, and buffers were too thin to weather the current.

In the flood of global markets, you do not rise by chanting; you rise by building a canoe that floats.

Read Episode Two

Energy Policy, Ghana News, Ghana's Political Economy, Ghanaian Politics, Politics

Pay 1 Cedi to End Dumsor? Structural Constraints vs Fiscal Fixes

Dr. George Asiamah

On 4 June 2025, Ghana’s Parliament passed a controversial bill introducing a one-cedi per litre levy on petroleum products – framed as a necessary intervention to address the ever-growing debt in the energy sector and, ultimately, to end the country’s lingering electricity supply challenges, popularly known as “dumsor.” The ruling NDC government justified the move by pointing fingers at the mismanagement of the previous administration, suggesting that the Energy Sector Recovery Programme had failed to achieve its intended financial restructuring. Now, they argue, it falls upon the public to pay – not for their sins, but for those of their predecessors. The catch? They promise this is the last push, the final Cedi to buy stability. One more sacrifice so we may see the light, literally.

But this move raises deeper questions about Ghana’s fiscal and political architecture, the nature of state-society relations, and the recurring tension between revenue mobilisation and public trust. While on the surface, the D-Levy is merely an energy financing mechanism, at its core, it exemplifies the political economy of managing scarcity, debt, and blame in a fragile democracy. Ghana has been here before. Levies have often emerged as government tools of last resort – temporary solutions that quietly become permanent fiscal burdens. Recall the price stabilisation levy, the sanitation levy, and more recently, the infamous e-levy. Many were billed as short-term interventions. Few were repealed. Even fewer were transparently accounted for.

To understand the deeper dilemma, one must examine the contradiction embedded in this levy. On the one hand, government presents it as an unavoidable necessity – the only path to restructuring the crippling legacy debt owed to Independent Power Producers (IPPs), fuel suppliers, and financiers. On the other, it insists that the cost to consumers will be negligible because the Cedi has recently appreciated, causing a marginal drop in pump prices. This is a risky fiscal narrative. It assumes currency appreciation is stable, and that petroleum product prices are not volatile. But in Ghana, neither is guaranteed. In fact, both are shaped by exogenous global shocks, domestic political risks, and structural vulnerabilities. To peg the justification for a permanent levy to a temporary macroeconomic blip is, at best, politically disingenuous.

Moreover, this levy arrives at a time when the government is trying to demonstrate that it is reversing some of the more unpopular decisions of the previous regime. The removal of the e-levy, a tax on electronic transactions, was lauded as a win for ordinary Ghanaians. But with the new D-Levy, critics argue, the government has merely shifted the burden from the digital economy to the pump. As some have quipped, “E-levy out, Dumsor D-Levy in.” The logic of this substitution is hardly comforting. For many households and informal sector workers, the increase in transport fares triggered by the levy could be more punitive than the e-levy they celebrated seeing repealed. The narrative, then, becomes one of robbing Peter to pay Paul, all under the guise of energy stability.

The political economy implications are profound. First, the D-Levy reinforces a trend in Ghanaian fiscal policy where governments resort to indirect taxes and levies to fund structural inefficiencies, rather than addressing the root causes. These include overcapacity in power generation, misaligned procurement contracts, and opaque financial arrangements with IPPs. Second, it exposes the failure of successive governments to ringfence public funds or build institutional trust. Civil society actors have long complained about the lack of transparency in how energy levies are spent. Audits are sporadic, reports often withheld, and public oversight weak. In this environment, even a well-meaning levy appears predatory.

Finally, this situation raises philosophical questions about who bears the cost of public failure in Ghana. Is it fair to ask today’s citizens to fund yesterday’s poor contracts, bloated power deals, and policy inertia? And if so, where is the evidence that this new stream of revenue will be managed differently? The D-Levy is not just about energy – it is about the moral and institutional legitimacy of governance. It is about the citizen’s role not just as taxpayer, but as shareholder in a public enterprise that seems to suffer from chronic mismanagement. If the goal is to end dumsor, then fiscal tools must be matched with structural reforms, transparency, and a governance model that rewards efficiency rather than excuses it.

In the end, Ghana’s energy future cannot be levied into stability. It must be planned, trusted, and built. A one-cedi solution to a multi-billion dollar governance problem may win a few political points in the short term. But without systemic reform, it risks becoming just another levy in the dark.

Ghana News, Ghana's Political Economy, Ghanaian Politics, Politics

Don’t Bet on the Cedi… It Has Mood Swings

Dr. George Asiamah

In Ghana, we celebrate the cedi’s short-term gains like a political victory parade. And in 2025, the band is playing again. The cedi has appreciated by over 24% against the US dollar in just a few months, dropping from over GH₵16 to around GH₵10.35. On the surface, this looks like redemption. A national comeback. Proof that the “economic management team” is finally awake.

But before we start naming our kids after the Finance Minister, and nominate the currency for the Nobel Prize in Economic Recovery, let’s take a hard, analytical look. Because history – and economic logic – tell us this performance is more likely to be a sugar rush than a sustainable meal.

Here’s why:

Supply of Dollars Will Begin to Dry Up

When a currency appreciates sharply in a short period, it disturbs the natural rhythm of the market. Those who hold dollars become hesitant. If you had dollars at GH₵16 and now it’s GH₵13, you’re not going to rush and exchange. You’ll wait – watching nervously, hoping the cedi will slide again so you can recover your margin. This behavior is natural, and it immediately begins to choke supply.

Remittance flows, a critical lifeline of Ghana’s forex market, also respond negatively. When the cedi is weak, sending money from abroad makes sense. For instance, if someone sending $100 previously got GH₵1,600 but now gets only GH₵1,300, they may wait or send less. Some may delay their projects, especially, if the appreciation of the currency does not correspond to reduction in price of goods. That is to say, whenever there is a sharp appreciation of a currency, inflows naturally slow, and another source of foreign currency begins to dry up.

Exporters, too, feel the pinch. When they convert their dollar earnings into cedis at a weaker rate, they earn more. But with this new wave of appreciation, their revenue in local currency shrinks. Rational business people do what rational business people do: they delay repatriation, under-invoice their exports, or keep funds abroad. Again, this starves the market of much-needed forex.

Demand for Dollars Will Start Creeping Up

While the supply side begins to strain, the demand side quietly builds up pressure. A stronger cedi means cheaper imports. For a heavily import-dependent country like Ghana, this spells trouble. As imports become more affordable, importers begin to order more – everything from electronics and machinery to fuel and food. This increased demand for dollars puts pressure back on the very currency that was just gaining strength.

Then comes the speculator class. These actors don’t buy into the hype – they’ve seen this before. Every sharp appreciation, they argue, is a temporary market sugar high. So while everyone else is praising the finance ministry, speculators begin to quietly accumulate dollars, betting on the inevitable reversal. And they are often right. Once the market begins to sense that the rally is over, the panic starts. Importers scramble for dollars. Parents looking to pay school fees abroad rush to buy. Businesses accelerate their purchases. The psychology shifts from confidence to fear, and in that moment, the cedi starts its descent.

The Invisible Hand the Gravity of Reality

This isn’t a new story. In 2015, the cedi surged in June, and by August, it had fallen just as sharply. In 2022, the same pattern repeated. There’s nothing uniquely 2025 about this. We are simply watching the same script play out, only with new actors and slightly different lines.

What’s often missing in these debates is the understanding that the market, like nature, abhors imbalance. Adam Smith called it the “invisible hand.” But let’s call it what it is – gravity. You can push the cedi up with policy tools, foreign inflows, gold-for-oil arrangements, or central bank interventions. But if the structural foundations aren’t strong – if your economy still imports more than it exports, still depends on remittances and commodity booms, still lacks industrial depth – then the appreciation is merely a balloon on a windy day.

Eventually, gravity wins.

So yes, you may clap for the cedi now. You may tweet, “Ato Forson is the man!” or argue over whether Bawumia could’ve done this. But remember: unless we fix the fundamentals, every sharp rise will end with a fall. That’s not cynicism – it’s economics. And unlike politics, economics doesn’t campaign. It simply responds.