Bannor questions government’s exchange-rate, import substitution policies
New Patriotic Party (NPP) Finance and Economy Committee spokesperson, Dr Frank Bannor, has questioned the consistency of the government’s economic strategy, particularly its approach to exchange-rate stability alongside its push for import substitution.
Dr Bannor’s concerns focus on the government’s efforts to maintain stability in the foreign exchange market while encouraging local production of goods currently imported into the country.
Finance Minister Dr Cassiel Ato Forson has said the government’s import-substitution agenda under the 24-Hour Economy is aimed at increasing domestic production, reducing Ghana’s import bill and lowering demand for foreign exchange.
The 2025 Budget also outlined Bank of Ghana foreign exchange interventions and FX forward auctions as measures to support the stability of the cedi.
However, Dr Bannor argues that these policies could create challenges for local manufacturers. He questioned how domestic producers would compete if policies supporting cedi stability also make imported goods relatively cheaper.
According to the economist, a stronger cedi can reduce the cost of imported products in local currency, potentially making them more competitive than locally manufactured alternatives.
He said this could create a policy tension with the government’s objective of promoting import substitution.
“You are facilitating the taste for imported products and yet, you say you want to increase local production of products. For who to buy when imported substitutes are cheaper?” he asked.
Dr Bannor maintained that exchange-rate policy should be considered alongside industrial policy, arguing that local manufacturers could struggle to compete if imported goods become cheaper while domestic production costs remain high.
The Finance Minister, however, has described exchange-rate stability as part of a broader strategy to reduce inflation, stabilise the economy and create an environment conducive to increased domestic production.
Government has also argued that successful import substitution would eventually reduce demand for foreign exchange by replacing imported goods with locally produced alternatives.
The debate therefore centres on how Ghana can pursue cedi stability and import substitution while ensuring that local manufacturers remain competitive.
Dr Bannor has called on the government to explain how its exchange-rate and industrial policies will work together to protect and expand local production.
“What sort of economics are we practising in Ghana now?” he asked, challenging the Finance Minister to clarify the policy direction.
By Esther Padmore Amonoo
