The Unseen Peril: How Rapid DigitalisationI In Ghana Imperils The Sovereignty Of The Cedi
In the fervent march toward digital transformation, spearheaded by Ghana’s Vice President, Dr. Mahamudu Bawumia, one cannot ignore the latent existential threats to the Ghanaian cedi—a perilous reality that has been shrouded in the rhetoric of progress. While digitalization promises efficiency and modernization, its darker underbelly is poised to wreak havoc on the nation’s monetary sovereignty, leaving the cedi vulnerable to systemic devaluation and marginalization.
The unbridled adoption of digital financial technologies, including mobile money and online payment systems, has inadvertently facilitated the proliferation of foreign currencies in domestic transactions. As Ghanaians increasingly gravitate toward dollar-pegged digital platforms for cross-border commerce, the cedi’s role as the primary medium of exchange is undermined. This phenomenon, colloquially termed “currency substitution,” risks relegating the cedi to the periphery of economic relevance.
Moreover, digitalization has created an ecosystem where speculative trading in foreign currencies thrives unchecked. Cryptocurrency adoption, although nascent in Ghana, is rapidly gaining traction, exacerbating the cedi’s volatility. Unlike traditional financial systems, cryptocurrencies operate outside the purview of central bank regulation, eroding the Bank of Ghana’s ability to control money supply and stabilize the cedi. This creates a treacherous paradox: the more Ghana embraces digital innovation, the less control it retains over its monetary destiny.
Compounding this crisis is the insidious allure of foreign digital payment giants that dominate the ecosystem. These entities not only siphon transaction fees from Ghanaians but also repatriate profits in foreign currencies, further pressuring the cedi. This unholy nexus between digitalization and capital flight has left the local economy hemorrhaging while ostensibly basking in the glow of technological advancement.
Dr. Bawumia’s ambitious vision, albeit laudable, appears to have underestimated the structural vulnerabilities of an economy heavily reliant on imports. Digital platforms exacerbate the trade deficit by making foreign goods and services more accessible, fueling an insatiable demand for foreign exchange. Consequently, the cedi’s depreciation becomes an inevitable side effect of the very digitalization designed to bolster economic resilience.
If these systemic flaws are not urgently addressed, Ghana risks mortgaging its economic future to the caprices of external forces. The government must prioritize policies that insulate the cedi from the destabilizing effects of digitalization. These include stringent regulations on foreign currency transactions, incentivizing local innovation in the digital space, and fostering a robust export-driven economy to strengthen the cedi.
In the end, Ghana stands at a crossroads. The question is not whether digitalization should proceed, but at what cost. If the nation fails to safeguard its currency, the promise of digital transformation could become its Achilles’ heel, leaving a legacy of economic subjugation masked as progress.
Author: Dr. Peter Nimbe (Lecturer – University of Energy and Natural Resources, UENR)
(Director of IT & Information Security, Election Has Consequences Movement, EHCM)
Vetted by: Erickson Ashiara (Press Secretary, EHCM)
Approved by: Isaac K.N. Batun (Executive Secretary, EHCM)
