Local production and value addition

Lessening our import dependence is the first step on the journey to an appreciated cedi. Ghanaian SMEs must stop importing goods and start producing these goods locally to add value, produce, and be able to meet the full complex local demand. 

So, instead of importing fruit juice, why not have more local SMEs use mangoes, pineapples and coconuts to produce export-ready drinks? 

As a coach for businesses, I urge entrepreneurs specifically to pay keen attention to opportunities for import substitution; goods we import but could easily produce here. 

There is massive potential for SMEs to service local demand across the board, from furniture to toiletries, paint and processed foods. 

This can be supported by the local government and financial institutions giving incentives towards local manufacturing and export-oriented SMEs. Each cedi spent on local goods relieves pressure on the dollar, while every dollar earned through export boosts our foreign reserves.

Digital and green innovation

Ghana’s SMEs need to keep pace as the world transitions to a digital and sustainable economy. Technology can reduce the cost, increase efficiency and widen access to new markets. For example, how about a farmer who uses mobile applications to get an accurate weather forecast, or a trader who records a sale through an e-commerce platform selling online? It is certainly an improvement in productivity & shortening the waste. 

An SME sector that is more productive and better structured is beneficial for national competitiveness and, thus, strengthens the cedi. This means a cedi is only as good as the productivity that created it, and productivity is even more a function of creativity.

Savings and investing mentality

Several SMEs in Ghana are engaged in the short-term mentality of quick profit, quick spending. But a powerful currency demands a culture of saving, investing and reinvesting. 

Every cedi we spend on imports or luxury consumption removes value from the system. As I always remind entrepreneurs in my work as a coach: build your business (the lifestyle will follow). SMEs that are resilient build reserves, apply technology and train their people. 

This creates stability for the company, yes, but also for the economy at large. As more Ghanaians deposit and invest here, financial institutions will have more liquidity available from which to loan to firms at a cheaper rate. Which promotes production, export and confidence, all of which shore up the cedi.

Export-oriented entrepreneurship

When Ghana earns more than it spends on foreign currency, the cedi becomes strong. That requires getting a greater number of SMEs to find their way into trade with Africa and outside of Africa.

There is no better time than now, with the African Continental Free Trade Area (AfCFTA) in place. Intra-African trade refers to the ability of Ghanaian entrepreneurs to export processed foods, clothing, handicrafts, technology services and agricultural products to other African countries without any major barriers. 

They need to be trained, mentored and equipped to achieve international standards, especially the SMEs. Export-oriented sectors generate foreign revenue, decrease the trade gap and provide employment. Export a lot, and the cedi gets stronger.

Fiscal understanding 

The power of a currency partially relies on the level of knowledge about money and its use of money. 

Bad ideas do not cause the downfall of many small and medium enterprises; rather, bad accounting practices do. Some mingle personal money with business capital; others go into debt, paying stupidly high interest rates for unprofitable endeavours. 

All that can be changed through training programmes, mentorship and coaching. Having financial literacy as an entrepreneur promotes better planning, reduces excessive indebtedness and allows you to make investment decisions with more maturity. 

Conclusion

The tale of the Ghana cedi remains an ongoing one, 60 years on. It’s a tale of survival, amongst horrors and learnings. However, its next chapter must be one of value creation.

With more productive citizens, responsible leaders and innovative businesses in Ghana, valuable cedi exchange rates do not matter if we cannot produce more value together. That is where SMEs come into play. 

They are not the casualties of a limp cedi; they could be heroes of a mightier one. Through local production, digital innovation, frugal saving, smart export and partnership building, they can produce an enduring value that will reinforce our national currency. 

The writer is a Senior Lecturer/SME Industry Coach, Coordinator (MBA Impact Entrepreneurship and Innovation) at the University of Professional Studies, Accra
ayiku.andrews@upsamail.edu.gh
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