Ghanaians Abandoning Cedi Accounts For Foreign Accounts – BoG

Ghanaians with bank accounts are increasingly closing accounts with savings in the local currency, cedi, and opening new ones in foreign currencies, the Bank of Ghana has revealed.

The revelation was contained in the Central Bank’s Banking Sector Report for September 2019.

According to the report, the domestic currency component of deposits in banks across the country recorded a slower growth of 9.1% (ghs84.8billion) in August 2019, which is 20% lower than the previous year’s growth.

At the same time, deposits in foreign currencies grew by 21.2% to the tune of ghs21.2billion during the review period. Comparatively, the previous year had seen a growth of 18.6% in deposits for foreign currencies.

Observers are interpreting the development as evidence that Ghanaians are losing faith in the cedi. However, an explanation that has emerged is the build-up to the Christmas season.Players in Ghana’s import economy are buying more dollars so they can bring in goods from abroad, according to this school of thought. 

However, this explanation has not been holding well since importers of Christmas goods usually place orders, latest by August.

The Institute of Social Statistics and Economic Research (ISSER) has put the development down to Ghanaians losing faith in the local currency. ISSER reports that the cedi lost some 10% of its value in the first half of 2019.

Meanwhile, the BoG also said overall deposits declined by 12.2% (ghs76billion) in August 2019 compared to a 26.2% rate observed a year earlier.  According to the Central Bank, this was also largely due to significant decrease in the Consolidated Bank’s deposits due to settlements it made to customers as part of the banking sector clean up.