Sonetco Institute, an ideological and development think tank applauds Dr. Mahamudu Bawumia, for the dexterity he exhibited at the lecture at the Miotso campus of Central University College during the ?Distingush Lecrture Series? on Tuesday, March 25, 2014.
We at SI were taken aback on one area of his delivery : ” REDENOMINATION exercise in 2007″, which Dr. Bawumia tried so hard to render fallacious and unfounded reason why Ghana is faced with its current challenges.
He state in his lecture notes on pages 29&30(dollarization) that ” For example, if you had GHC 100,000 in 2008, you had roughly the equivalent of US$100,000, but today that same GHC100,000 is only equal to US$38,500 meaning that through no fault of yours and just by deciding to hold on to your assets in cedis, you would have lost over US$60,000 or 60% of your assets in just 5 years”.
Pages 38&39(redenomination)” Mr. Chairman, there are some who have argued that the cedi exchange rate depreciation is the result of the redenomination of the cedi that took place in 2007. It is a mindboggling argument……page 39 “Between 2004 and 2007, the cedi depreciated by an average of 2.25 percent against the U.S. dollar. In any case, how can an event (redenomination) which took place in 2007 suddenly rear its head in 2012, 2013 and 2014? Where was the impact of redenomination when the exchange rate was stable in 2010 and 2011?”.
Sonetco Institute wants to ask Dr. Bawumia did he make such submission out of shear political expedience or it was intended to score the usual cheap political 3 points? Or was it intended to throw dust into the eyes of ordinary Ghanaians or he got his facts wrong or it was a deliberate omission to exaggerate the state of the economy? He should have stated the direct exchange rate after the redenomination exercise. Because the facts state that in 2007, the cedi to dollar was 9300cedi / 0.930GHC as selling price and 9600 cedi / 0.960ghc as buying price. May 2008, 1.005 GHC to $1 and by September 1.155 GHC to $1
In the face of these facts, as an economist of his caliber, can he state that the cedi was almost equivalent to the dollar as he submitted under “dollarization”, if this is not shear mischief then words can’t describe it, because he is a hailed and acclaimed world class economist and as such, we expected him to know that 0.93 can not be rounded up or off to 1. And if we needed 9600 cedi to by a dollar in 2007and between 9300 cedis/0.930- 11550 cedis/ 1.155 in 2008, then what was the benefit of the redenomination exercise he supervised? Because the value was the same, we needed more cedi to buy a dollar, as it is still the case.
?What did he do as a deputy governor of Bank of Ghana to make sure that our cedi was indeed the “legal”tender as Rand is in South Africa? As an economist, he knows the positives of having trading in one?s currency like that of South African rand and CFA for francophone nations. He made mention of the stability of the CFA among French speaking countries over the years as our cedi depreciates. Dr. Bawumia, do you know any French speaking nation that use dollar or quote prices in dollars along side the CFA over the period of time and maintain stability? Why did all EU nations like Germany France etc abandoned their currency for euro? Was it not to stop dual usage of two currencies, just like what the west African monetary zone wanted to achieve but Ghana as a nation and he as deputy governor made sure it never materialized, when other nations looked up to Ghana and Nigeria to start the usage of the Eco?
To SI, ?simple fact available during the redenomination exercise which he supervised states that our denomination before and after the exercise is as follows, though we are still waiting to be told how much the redenomination exercise cost us as a nation.
Denomination ? ? ? ? ? ? ? ? ? ? ?Redenomination
5,000 000 cedi ? ?XX ? ? ? ? ? ? ? ? 500 ghc
2,000 000 cedi ? ?XX ? ? ? ? ? ? ? ? 200 ghc
? ?500,000 cedi ? ?XX ? ? ? ? ? ? ? ? ? 50 ghc
? ?200,000 cedi ? ?XX ? ? ? ? ? ? ? ? ? 20 ghc
? ?100,000 cedi ? ?XX ? ? ? ? ? ? ? ? ? 10 ghc
? ? ?50,000 cedi ? ?XX ? ? ? ? ? ? ? ? ? ? 5 ghc
20,000 cedi ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?2 ghc
10,000 cedi ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?1ghc
? 5,000 cedi ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? 50 p
? 2,000 cedi ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? 20 p
? 1,000 cedi ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? 10 p
? ? ?500 cedi ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? 5 p
? ? ?200 cedi ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? 2 p(?)
? ? ?100 cedi ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? 1 p(X)
? ? ? ?50 cedi ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?(XX)
*** the XX explains the FACT that before the redenomination Ghana did not have single note to represent them.
*** the ?(?) explains the FACT that this denomination was not redenominated.
*** the ?(X) explains the FACT that as we speak it is not a “legal” tender in circulation except banks
**** the (XX) explains the FACT ?that this denomination was not redenominated.
Can DR Bawubia explain to us in simple economic term,
1. ?why the absence of the 200 cedi/ 2p(?) which was the price of sachet water jumped to 500 cedi/5p?
2. Where did the difference of 300 cedi/3p went to?
3. And the accumulation of such figure over a period of time will not have dire consequence on our economy?
4. Where did the 50 cedi (XX) vaporized to, which was then the price of polytene bags and it absence jumped to 100 cedi/1p. Which sadly soared to 500 cedi/5p?
5. Didn’t the omission or termination of the usage of the 50 cedi (XX) have any consequence on our currency?
6. Didn’t the price changes for the FACT that there was no 5 cedi (XX) which got goods of such piece soared to 500 cedi/5p had any economic challenge for our country?
7. Isn’t it also a FACT that prices of goods e.g 1,250 cedis/ 1.25 p rounded up to 1,500 cedi/1.5p to make change easily available to buyers?
8. Didn’t the price changes as stated in 7 have any consequence on the monetary policies of the nation?
9. Isn’t it a FACT that exchange rates also rounded up to make transaction possible!?
10. Isn’t is a FACT that all the above stated example cause the inflation of 2008 to rise up from 10.10% July 2007 after the exercise through to 18.13% December 2008 ( source-?http://datablog.peacefmonline.com/pages/blog/9/) and these not well dealt with, has created some rippling effect in this last years?
Dr. Bawumia’s words of impeccability is at stake here, and the facts stated in this release is a clarion call for him to come again and call a spade a spade. The redenomination exercise had a rippling effect on our economy and since it was not curtailed we are ripping it’s fruits. This isn’t the case where he can condemn data GSS yet use their data when it suites him.
Sonetco Institute will not play the ostrich by denying that facts? staring us in the face, that Ghana is in economic quagmire. We want to use this medium to caution the president to be mindful of his development confidence he is instilling in Ghanaians as he tours Ghana.
Long live Sonetco Institute
Long live Ghana
Eric E. Essel ? 0244381797
Kwasi Dawood ? 0246399412
Robert Ahiabenu ? 0242357975
Administrators; SONETCO Institute.

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