Assessing the Impact of Cfa Franc Currency On Local Businesses in Bawku Municipality, Ghana

Abstract

The main objective of the study is to assess the effects of the exchange rate fluctuation between the Ghana Cedi and the CFA on the prices of goods and services in Bawku municipality in the Upper East Region of Ghana. This paper looks at the impact of CFA FRANC currency on local Businesses in Bawku Municipality, to examine how the CFA Franc affect prices of goods, the intention here is to ascertain whether information about exchange rates is widely and cheaply available to business owners who trade using the CFA Franc. Lastly, the paper looks at what coping measures are adopted by business owners during depreciation. In particular, it demonstrated that foreign exchange rate reform involves a tremendous amount of institutional and foreign exchange support, sound fiscal and monetary policies and judicious trade and price regimes. The Bawku study shows that the exchange rates of the Ghana Cedi and the CFA Franc is not regulated by any institution of state at both in Ghana, Togo and Burkina Faso borders hence the dominance of the Black Marketers who fix their own rates at their convenience. The findings revealed that Ghana’s over-dependence on importation erodes the country’s foreign currency reserves and these impacts on the value of the local currency, the Ghana Cedi. Currency fluctuations arise from the floating exchange rate system, which is followed by most major economies. The researcher recommended that the Bank of Ghana first of all should create a condition within the market which is favorable for all traders to have access and availability of forex for their business. Also, the Bank of Ghana, Ministry of Finance and the security forces should collaborate to launch a task force that would crack down on all black-market operators within the major business areas in the country.