Cedi Gains Spark Golden Chance for Industrialization: Why Now Is the Best Time to Import Machinery

Among the numerous benefits of the recent sterling performance of the cedi is one that speaks to the core of Ghana’s economy. Did you know that the development presents a golden opportunity for the structural transformation of the economy? Industrialization is one thing that has eluded Ghana’s economy, and it has just become a rhetoric or a buzzword in national economic conversations without any serious actions. Governments and industries have often professed industrialization, but hurdles have made this dream almost a mirage.

One critical factor that has become an obstacle to the industrialization agenda is the exchange rate. The persistent free fall of the cedi makes importation extremely expensive, including machinery for industrialization.

But there is good news. In the midst of Ghana’s fast-changing economic landscape, occasioned by the recent robust performance of the cedi, one surprising winner is local businesses eyeing industrial expansion.

With the Ghana cedi appreciating significantly in recent months, experts say there has never been a more strategic time for companies to import machinery and equipment to power their growth than now. Here is why the timing couldn’t be better.

A Stronger Cedi Means Cheaper Imports

Finance Experts such as Prof. Pat Obi at Purdue University have observed that the Ghana cedi has surged in value by nearly 30–35% in less than six months.  Such a strengthening of the local currency opens a valuable window of opportunity for businesses that rely on imported industrial equipment to drive industrialization.

Businesses, over the years, have always bemoaned the cost of importing goods, especially capital machinery, since it is directly tied to the strength of the cedi. When the cedi depreciates, businesses importing machinery need more of the local currency to import. However, when it strengthens, it means you need fewer cedis to buy the same dollar-priced item. This is what experts describe as a direct savings opportunity.

For example, if a business planned to buy a $100,000 machine when the exchange rate was GHS17 to the dollar, it would need GHS1.7 million. But with the current appreciation pushing the rate down to, say, GHS11, the same machine now costs GHS1.1 million. This is a massive GHS 600,000.

Lower Import Duties Sweeten the Deal

The savings made on the price are not all. Import duties in Ghana are dollar-denominated, meaning they are calculated based on the dollar value of the item being imported. Now that the cedi is appreciating massively,  the cedi-equivalent of those duties is dropping significantly.  This is another major cost advantage.

Let’s say your import duty on that same $100,000 machine is 10%. That’s $10,000. At GHS17 to the dollar, you’d pay GHS170,000 in duties. But now, at GHS11, you pay only GHS110,000. That’s another GHS60,000 in savings.

Put together the savings from the price and the import duties, businesses could potentially save hundreds of thousands to millions of cedis, simply because the currency is temporarily in their favor.

Now is The Time

Ghana’s industrialization agenda has long been challenged by high import costs and currency volatility. For many small and medium-sized manufacturers, the capital needed to acquire modern equipment has remained out of reach.

But with the cedi’s recent impressive now, the story has changed. This is one of those rare macroeconomic moments where the numbers are finally aligning in favor of local producers. This kind of currency strength should push businesses to invest in efficiency, automation, and scale and up.

Timing Is Everything

While the cedi’s appreciation is welcome news, many experts, including Prof. Obi, fears that such a rapid gain in a short time may not last since it is not wholly supported by deep structural reforms.

Businesses are advised to take caution. Waiting to see whether the cedi will appreciate further before importing is risky.

This is the time for businesses seeking industrialization to evaluate their plans. If you’ve delayed importing machines or upgrading systems, now is the time to revisit those plans.

It is time to speak to banks and suppliers. With lower costs on the table, renegotiate financing or instalment terms based on the stronger cedi.

Don’t just act. Talk to customs brokers and confirm how much duty you could save right now and fast-track your documentation.

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