The Cedi’s Trajectory in 2025: Implications for Ghanaians at Home and Abroad

The Cedi’s Trajectory in 2025: Implications for Ghanaians at Home and Abroad

In 2025, Ghana is witnessing a rare but significant economic development after a period of significant depreciation of the currency, the cedi is seen to appreciate against major international currencies such as the US dollar (USD), British pound (GBP), and euro (EUR).

This newfound strength, driven by a confluence of robust central bank policies, increased gold reserves, favorable global commodity prices, and improving investor confidence, is poised to reshape the economic landscape for citizens within Ghana and the diaspora alike. While bringing considerable benefits, this appreciation also presents a unique set of challenges and opportunities that warrant careful consideration

For ordinary Ghanaians, the appreciating Cedi is a welcome relief, primarily manifesting as a reduction in the cost of living and enhanced purchasing power. Ghana’s economy is heavily import-dependent, meaning a stronger Cedi directly translates to cheaper imported goods. As of April 2025, inflation has eased to 23.1% in may 2025 largely attributed to the Cedi’s appreciation. Anecdotal evidence from markets across Accra indicates a gradual decline in the prices of imported electronics, pharmaceuticals, and household appliances.

For instance, a vendor at Makola Market noted a 10-15% price reduction on imported smartphones and kitchenware as new stock arrived, reflecting the lower cost of procurement in foreign currency. This directly benefits households by stretching their budgets further. The strengthening Cedi has also contributed to a decline in fuel prices. With global oil prices remaining volatile, Cedi’s resilience has shielded consumers from the full impact of international price swings.

Petrol prices have reportedly fallen by as much as 8%, reducing transportation costs for commuters and businesses, thereby easing the burden on daily expenses. This has a ripple effect, potentially reducing the cost of locally produced goods that rely on transportation.

A stronger Cedi significantly eases the cost of servicing Ghana’s substantial external debt. With a considerable portion of government liabilities denominated in foreign currency, the appreciation makes repayments cheaper in local currency terms. This frees up valuable fiscal space, allowing the government to allocate more resources towards crucial investments in infrastructure, social programs, and economic development.

According to the 2025 Budget Statement and Economic Policy, Ghana’s total public debt stood at approximately US$49.3 billion as of December 2024, with external debt accounting for over half. Cedi’s appreciation translates into a substantial saving in the Cedi equivalent of these repayments, supporting improved debt sustainability and reducing fiscal pressure. This allows for potential reallocation of funds to sectors like healthcare and education, which directly benefit citizens.

The Ghanaian diaspora plays a crucial role in the nation’s economy through significant remittance inflows. The appreciation of the Cedi presents a mixed bag of impacts for this vital segment. For Ghanaians in the diaspora sending money home, a stronger Cedi means that their foreign currency remittances will convert to fewer Cedis. This can reduce the perceived value of their financial support to family members in Ghana.

If, for instance, in late 2024, US$100 translated to approximately GH₵1650, with the Cedi strengthening to GH₵11.85 to the dollar by April 2025, that same US$100 would now yield only GH₵1185. This represents a significant decrease in the local currency amount received by beneficiaries, impacting their purchasing power within Ghana. This can lead to the diaspora needing to send more foreign currency to maintain the same level of support, or a reduction in the living standards of their dependents in Ghana if they maintain the same foreign currency remittance amount.

While remittances face a headwind, a stable and appreciating Cedi can signal a more attractive investment environment. Reduced exchange rate volatility lowers currency risk for foreign investors. The improved macroeconomic stability and a strengthening currency can boost investor confidence, encouraging capital inflows into productive sectors.

Businesses in the diaspora considering direct investments in Ghana, such as establishing businesses or purchasing real estate, may find the environment more predictable and appealing. For example, a Ghanaian entrepreneur based in the UK looking to set up a manufacturing plant in Ghana might find the reduced cost of importing machinery and the increased stability more attractive.

However, the higher cost of living due to the stronger Cedi, even with lower inflation, might impact the overall cost of doing business. For diaspora members looking to buy property or invest in local businesses, the stronger Cedi means they will need more foreign currency to acquire the same asset in Ghana. While the long-term stability might be appealing, the immediate cost of entry increases. This might lead to a slowdown in certain types of diaspora investments, especially those sensitive to exchange rates.

Despite the immediate benefits, Cedi’s appreciation also poses certain challenges that require careful policy management. A stronger Cedi can make Ghanaian exports more expensive in international markets, potentially reducing their competitiveness.

This is particularly relevant for non-traditional exports. While gold and cocoa exports have benefited from high global prices, other sectors, such as textiles or manufactured goods, might find it harder to compete. A recent report highlighted that a 10% US tariff on Ghanaian exports, combined with the Cedi’s appreciation, could make Ghanaian products relatively more expensive abroad.

This calls for strategies to enhance the non-price competitiveness of Ghanaian exports through quality improvements, value addition, and diversification. The lower cost of imports due to a strong Cedi could discourage local production, especially where domestic industries rely on imported inputs or face direct competition from cheaper foreign goods. To sustain the positive momentum and mitigate potential downsides, Ghana must continue with prudent macroeconomic management. This includes:

• Fiscal Discipline: Maintaining strict fiscal discipline as outlined in the IMF program to prevent a relapse into debt accumulation.
• Diversification of Exports: Implementing policies that support the diversification of Ghana’s export base beyond traditional commodities to reduce reliance on primary goods and enhance global competitiveness.
• Support for Local Industries: Strategic interventions to boost local manufacturing and agriculture, reducing import dependence and fostering domestic job creation.
• Continued Foreign Reserve Accumulation: Building robust foreign exchange reserves to provide a buffer against external shocks and maintain Cedi stability.

In conclusion, the appreciation of the Ghanaian Cedi in 2025 marks a pivotal moment for the nation’s economic trajectory. While it brings tangible relief to citizens within Ghana through increased purchasing power and easing inflationary pressures, it also necessitates a strategic re-evaluation for the diaspora regarding remittances and investment.

Sustaining this positive momentum requires continued commitment to sound economic policies that foster diversification, enhance competitiveness, and build resilience against future shocks. Cedi’s journey serves as a powerful testament to the impact of focused policy interventions on the lives of a nation and its global community.

About Dr. Bernard Tetteh-Dumanya

Dr. Bernard Tetteh-Dumanya is a distinguished Ghanaian financial economist and consultant with nearly three decades of experience spanning academia, corporate finance, and agribusiness. He has held pivotal roles at institutions such as UBA Ghana, SIC Financial Services, Empretec Ghana, and the Swiss International Finance Group, reflecting his profound understanding of global finance. Renowned for pioneering efforts in risk management, compliance, and corporate strategy, Dr. Tetteh-Dumanya has significantly contributed to Ghana’s financial landscape.

His expertise encompasses venture capital, business and financial reengineering, and fundraising, playing a crucial role in the growth and development of numerous entities. Driven by a commitment to capacity development, he has provided consultancy services to a diverse array of local and multinational organizations, including GIZ, AGRA, SNV, DANIDA, and USAID. As the CEO of SGL Royal Kapita, he has introduced innovative investment services targeting Ghana’s agriculture sector, aiming to support farmers and agribusinesses in achieving financial stability and growth. Beyond his professional endeavors, Dr. Tetteh-Dumanya is an influential columnist, offering incisive analyses on Ghana’s economic policies and advocating for strategic financial mechanisms to enhance the nation’s economic sovereignty.

For inquiries, Dr. Tetteh-Dumanya can be reached at: mafioba@yahoo.com