BoG moves to further strengthen cedi defenses

The Bank of Ghana, working with the Ghana Community Network Services Limited (GCNet), is putting measures in place to further strengthen the existing export monitoring platform to ensure the repatriation of all export receipts into the country.

The central bank is seeking to incorporate the Letter of Commitment (LOC) number as part of the swift message in the new electronic export monitoring platform that has been in place since July 1, 2016.

“BOG started tracking export proceeds in July. So far, it is going very smoothly. But we keep emphasising that they need to include the LOC number as part of the swift message that is coming so that the banks can do the reconciliation quickly. That is the additional things that we are doing for the BOG,” Mr. Eben Tawiah Engmann, GCNet’s Senior Product Specialist said.

The system, which was deployed last July, has fairly ensured the availability of major trading currencies such as the dollar and pounds and helped slowed the rate of fall of the local currency; the Cedi since July depreciated by about 1.3 percent.

“With all exports, the BOG expects the monies to come in but the monies were not coming in. So, we gave them a system that will track all the exports that were going out. So, before you do your shipment out you have to do a Letter of Commitment (LOC) that will state the value, volumes, destinations that the product is going and the bank that is supposed to receive the proceeds when they come in.

So once the shipment is done and the monies don’t come in, exporters are blocked from doing further exports. It’s all a way of checking to ensure the monies come in to the country,” Mr. Engmann told the B&FT on the sidelines of the launch of the GCNet-FDA Pharmaceutical Market Information

Millison Narh, First Deputy-Governor of the Bank of Ghana, in an earlier interview, said: “The rather sharp depreciation of the Ghana cedi last year was a wake-up call that appeared to confirm the suspicion of many industry players that a big chunk of export proceeds, particularly gold, is not being repatriated into Ghana”.

According to figures from the Bank of Ghana, in 2015, a total of US$3.2billion worth of gold was exported from Ghana by both large and small-scale miners.

However, a number of state officials strongly believe that a larger quantity of the commodity leaves the country illegally on a daily basis.

Security agencies continue to uncover gold bars meant for exports without proper documentation. This is to avoid paying the right taxes and repatriating the proceeds from gold sales into the country, contrary to the Bank of Ghana Act (Act 612, 2002).

In February, the Customs Division of the Ghana Revenue Authority (GRA), acting on a tip-off, impounded 12 boxes at the Kotoka International Airport which contained gold bullion weighing about 480kg and valued at US$18million. The seized bullion was bound for Asia and the Middle East

“In the wake of a foreign exchange dearth from export revenues — resulting in perennial depreciation of the Ghanaian cedi against major trading currencies such as the US dollar, the euro and the Pound Sterling — the time has come for all stakeholders in the export sector to ensure that every export commodity that leaves the shores of Ghana is accounted for in the Balance of Payments Account.

This is the only way we can curb the perennial shortage of foreign exchange with its attendant depreciation of the Ghana cedi, and accumulate adequate reserves,” Mr. Narh said.