The Bank of Ghana’s (BoG) 2024 financial report has reignited discussions about potentially adopting the U.S. dollar as legal tender, with U.S.-based finance professor Pat Obi arguing the central bank’s performance underscores systemic vulnerabilities tied to currency volatility.
Prof. Obi of Purdue University Northwest, a frequent advisor to Ghanaian institutions, noted that while the BoG reported improved figures, these gains stemmed largely from external factors like high global prices for gold and cocoa—not operational strength. “The improvements seem to be driven mainly by external valuation effects rather than operating performance,” he told The High Street Journal. He warned that falling commodity prices could have reversed the gains, highlighting Ghana’s over-reliance on dollar-linked exports and exchange rate fluctuations.
The professor, a longtime advocate for currency reform, pointed to francophone neighbors’ stability by pegging the CFA Franc to the euro. “Neighboring countries don’t face this exchange rate risk because their currency is tied to the euro,” he said. He urged the BoG to explore dollarization to mitigate inflation, depreciation, and balance-of-payment crises, though he acknowledged the proposal’s contentious nature.
The debate remains polarized. Supporters argue dollarization could stabilize prices and attract investment, while critics caution it would erode monetary sovereignty. The BoG has yet to respond, but the report’s findings may pressure policymakers to address structural weaknesses in Ghana’s exchange rate framework.
Ghana’s cedi has lost over 20% against the dollar since 2023, with inflation averaging 25%—factors fueling calls for radical monetary reforms.
