Cedi strength insufficient to prompt price reductions, manufacturers still recovering - Dr Nsiah-Poku

The President of the Association of Ghana Industries (AGI), Dr Kofi Nsiah-Poku, has stated that the recent appreciation of the Ghana cedi is not sufficient to prompt immediate reductions in product prices, as manufacturers continue to recover from heavy losses sustained during the period of a weak currency.

Speaking on PM Express Business Edition, Dr Nsiah-Poku explained that when the US dollar surged, many local manufacturers absorbed substantial financial losses.

“At the time the dollar was very high, I was operating at a loss. Now that the dollar has declined, I need to recoup those losses,” he said.

He emphasised that the stronger cedi is only one factor influencing pricing decisions. “The currency’s improvement is one reason prices are not falling as fast as expected, but it is not the only factor,” he noted.

Dr Nsiah-Poku also pointed to doubts over the sustainability of the cedi’s gains, adding that industry players remain cautious about whether the economy is strong enough to maintain the currency’s current value.

“Industry still does not believe the economy is robust enough,” he stated.

He further highlighted Ghana’s largely credit-based economy, which complicates pricing strategies. Manufacturers frequently supply goods on credit and receive payments months later.

“In a credit economy, if I produce and supply goods on credit, and payment comes two, three, or four months later, the currency gain could reverse by then. That makes pricing adjustments risky,” he explained.

This risk, according to Dr Nsiah-Poku, makes manufacturers hesitant to lower prices too quickly. “We have to be cautious in adjusting prices,” he added.

Beyond currency fluctuations, he also expressed concern over high utility costs, which continue to put pressure on production expenses.

“Even with the dollar weakening, utility costs remain high,” he said, arguing that tariffs should reflect the stronger cedi, particularly when utility costs are tied to foreign-exchange inputs.

“If the dollar falls, we would expect utility costs to decrease as well, balancing the gains from the improved exchange rate,” he noted.

Dr Nsiah-Poku’s comments underscore the challenges manufacturers face in balancing currency volatility, credit risk, and rising operational costs.

While the cedi’s performance signals some macroeconomic stability, he emphasised that for industry players, long-term stability and sustainable recovery remain more important than short-term gains from currency fluctuations.