Business News of Thursday, 23 June 2016
Source: citifmonline.com
Professor Godfred Bokpin, Economist
As UK decides on whether to stay with or exit the European Union (EU) today, economic analysts are ruling out any significant impact of the decision on the Ghanaian economy.
For Economist, Professor Godfred Bokpin, an exit or stay will not affect operations of some UK companies in Ghana. “If the UK should exit, it would have different implications on foreign policy, trade partnerships, and agreements among others.
But I want to believe that even of the UK decide to remain in the Eurozone, things will not change within the short to medium term,” he told Citi Business News.
The UK is set to hold a referendum today to decide whether or not Britain should exit the European Union.
It follows Prime Minister David Cameron’s commitment to respond to growing calls from his own Conservative MPs and the UK Independence Party (UKIP), who argued that Britain had not had a say since 1975 when it voted to stay in the EU in a referendum.
They further argue that the EU has since gained more control over their daily lives. But citing developments with Barclays and Standard Chartered Banks as examples, Professor Bokpin maintained that the current market share of the two banks and recent decisions by Barclays to exit its stakes in Africa will not necessarily distort the Ghanaian economy.
“If you look at the position of Barclays for instance, it is essentially selling off its stakes in Africa.
if you look at the percentage of the market share of these foreign banks in Ghana today, you can see that the dynamics have changed. There’s some kind of historical traces to it but things have changed following the influx of Nigerian banks and those from other countries as well.
So you do not only have to consider the historical development and assuming Barclays decides to exit, the stakes will easily be taken up,” Professor Bokpin further observed.
Global distortions to impact Ghana
The economist, however, acknowledged that some global trends over the decision by Britain will trickle down to economies within the sub-region of which Ghana is no exception.
“There are certain global risks that if the UK decides to exit, will trickle down to Ghana. It could trigger some global discussions from global risks that the IMF, World Bank are studying and their possible outcomes with different scenarios.
But what is coming out clearly is that regardless of the outcome, things will not clearly be exactly the same,” He, however, urged Ghanaian authorities to proffer solutions to deal with any trigger that either outcome will have on developments in the economy.
British Pound not to impact on cedi
Meanwhile currency analyst, Samuel Ampah believes Ghana’s local currency the cedi, will be least affected by any decision by the UK to stay or exit the EU. He argues that the volume of trade between the UK and Ghana as well as the limited financial aid granted to the latter will not result in a fast depreciation of the cedi.
“I can clearly state that there will not be any impact. Ghana is not currently benefiting directly from Britain in terms of aid. When Ghana was regarded as a poor or developing country, you could have Britain giving out some aid.
Now Ghana is not directly benefiting so much in terms of aid from Britain that is how come you can guard the British pound being used to support our economy. But because we are not earning so much from Britain, we might not necessarily feel it,” “The key thing is that it depends on the trade level that Ghana will have with Britain independently.
It is not with the EU but Britain independently. So if Ghana should improve, or make trade relationship with Britain, then that’s how come maybe we can have some effect on the currency,” Mr. Ampah further intimated.