Cedi Gains Offer Short-Term Cheers, but Ghana’s Industrialisation Challenge Endures, Warns Bright Simons
Ghana’s cedi has recorded its strongest performance in over three decades, marking a rare victory for Finance Ministry and Bank of Ghana officials. Yet technology and policy analyst Bright Simons cautions that short-term currency stability is only a first step. The real challenge lies in turning these gains into long-term economic transformation, industrial growth, and sustainable job creation.
Political vs Policy Accountability
Simons distinguishes between political accountability delivering on immediate promises like stabilising the cedi and policy accountability, which evaluates whether economic policies foster lasting development and social welfare. “Holding the exchange rate down is important,” he says, “but it must also create conditions that attract investment, build manufacturing capacity, and generate jobs.”
Industrialisation and Multinational Manufacturing
Ghana has long attracted multinational manufacturers. After independence, firms such as Unilever, Nestle, Cadbury, Guinness, PZ, Philips, Sanyo, Volkswagen, and Siemens established operations in the country. Across Asia, similar strategies of attracting foreign companies brought capital, technology, and managerial expertise, enabling local industrial champions to emerge. Countries like Taiwan, South Korea, Vietnam, and Thailand leveraged this approach to drive rapid industrialisation.
However, Ghana’s industrial progress has been constrained by exchange rate instability. “The behaviour of the cedi over decades has made Ghana a risky market for global multinationals,” Simons observes, limiting the growth of domestic manufacturing capacity despite repeated investment efforts.
Unilever Ghana: A Bellwether for Industrial Struggles
Simons examined 30 years of financial and operational data from Unilever Ghana, one of the country’s longest-serving multinational firms, to illustrate the impact of currency volatility on industrial growth.
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Revenue fell from $111 million in 1994 to just over $65 million in 2024, a compound annual growth rate of –1.74%.
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Shareholder equity peaked at $64.3 million but dropped to $6.3 million in 2022, now at $15.9 million.
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Average net margin over three decades was 5.5%, far below the 12–16% typical for successful global manufacturers; in 2020, it fell to –11% with return on equity at –139%.
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Market capitalisation rose from $19 million in 2000 to over $700 million in 2008, before falling below $120 million today.
While some of this decline reflects Unilever scaling back complex operations in textiles and timber, Simons argues that currency volatility and the resulting erosion of dollar returns has been the larger factor. Even though Unilever’s market cap in cedis has grown, the company’s performance highlights the risks for multinationals considering Ghana as a manufacturing hub.
The Exchange Rate Factor
At the core of Ghana’s industrialisation challenge is the exchange rate. Short-term currency gains are politically gratifying but insufficient to build long-term investor confidence. Multinationals require predictable and stable conditions to plan, invest, and expand manufacturing operations.
“Ghana’s industrialisation problem is fundamentally an exchange rate story,” Simons explains. “Political victories in currency management are necessary, but decades of policy consistency are what truly attract and retain multinational manufacturers.”
Policy Implications
The lesson for Ghana is clear: stabilising the cedi is a start, but achieving industrial growth demands sustained policy accountability. Exchange rate management must be integrated with broader industrial strategy, infrastructure development, and targeted investment incentives to create a predictable environment for both foreign and local investors.
Simons concludes: “Political wins are gratifying. But the real victory will come when the cedi’s stability translates into industrial growth, manufacturing jobs, and meaningful economic transformation for Ghana.”
