Dr. Frank Bannor, a Director of IERPP
New Patriotic Party (NPP) Finance and Economy Committee spokesperson, Dr Frank Bannor, has questioned the contradiction in the government’s economic strategy, particularly its approach to exchange-rate stability and its simultaneous push for import substitution.
Dr Bannor’s concerns centre on the government’s policy of supporting stability in the foreign exchange market while promoting domestic production to replace imported goods.
Finance Minister Dr Cassiel Ato Forson has stated that the government’s import-substitution drive under the 24-Hour Economy is intended to increase domestic production of goods currently imported, reduce the country’s import bill and lower demand for foreign exchange. The 2025 Budget also identified Bank of Ghana foreign-exchange interventions and FX forward auctions as measures to support cedi stability.
But Dr Bannor argues that the policy mix raises an important question: if the cedi is deliberately supported to make foreign currency relatively cheaper, what happens to Ghanaian producers who have to compete with imported goods?
According to the economist, a stronger cedi can reduce the domestic-currency cost of imports, potentially making imported products more competitive against locally produced alternatives.
That, he argues, creates a policy tension with the government’s stated ambition of promoting import substitution.
“You are facilitating the taste for imported products and yet, you say you want to increase local production of products. For who to buy when imported substitutes are cheaper?”
Dr Bannor’s argument is essentially that exchange-rate policy cannot be considered in isolation from industrial policy. If imported goods become relatively cheaper while local manufacturers continue to face high production costs, domestic producers could find it harder to compete, even as government seeks to encourage them to produce more.
The Finance Minister, however, has presented exchange-rate stability as part of a broader strategy to reduce inflation, stabilise the economy and create conditions for increased domestic production. Government has also argued that import substitution itself should eventually reduce demand for foreign exchange by replacing imported goods with locally produced alternatives.
The debate therefore raises a fundamental economic question for policymakers: Can Ghana simultaneously pursue a stronger, more stable cedi, cheaper imports and aggressive import substitution without creating conflicting incentives for local producers?
For Dr Bannor, the government needs to explain how these policies fit together.
“What sort of economics are we practising in Ghana now?” he asks, challenging the Finance Minister to clarify how the government intends to protect and expand local production while maintaining policies that can make imported alternatives more affordable.
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