One of the key indicators of a strong economy is the performance of a currency in the exchange rate market.
A strong currency means that export and import business will be more lucrative as it will cost businesses less cedis for more dollars or pounds. This has a huge positive bearing on the economy. The Ghana cedi is however a weaker currency relative to its major trading currencies, especially the U.S dollar and pounds and this is mainly as a result of the import-driven nature of the Ghanaian economy.
Successive governments since the advent of the fourth republic have tried hard to diversify and transform the economy into an export-driven one but their efforts have not yielded the desired results. The economy continues to be import-driven, the cedi continue to be a weaker currency relative to its major trading currencies and the resultant effect of a devastating economic hardship as experienced by Ghanaians in recent times was predicted.
Ghana has a floating exchange rate regime. In August 2014, the Bank of Ghana (BoG) rebuffed international media- Reuters and Financial Times’ report that the cedi has depreciated by 40% against the U.S dollar. According to a statement issued by the BoG, “…the cedi traded at 2.34 against the US dollar in January 2014, and as of Friday 1st August, 2014, it stood at 3.035 to the US dollar, reflecting a cumulative depreciation of 22.9% over the period”.
Most economic pundits attributed the depreciation of the cedi to the fall in the supply of U.S dollars and this did not agree to the directives rolled out by the BoG to salvage the problem they identified- the dollarization of the economy. The economic pundits were however vindicated when the cedi started appreciating against the U.S dollar as a result of the one billion U.S dollar Eurobond which was oversubscribed by two billion U.S dollars, and the one point seven billion U.S dollars Cocoa syndicated loan which were both issued and signed respectively on September 11, 2014.
In the midst of the falling cedi and economic hardship, the “problem of the day” was what can be done to increase or strengthen the value of the cedi and achieve stability? The economic pundits answered industrialisation to make the economy an export-driven one as the one-stop solution. This however requires huge capital investments and this is taking our governments’ eternity to achieve.
May be the huge potential of the Tourism and Creative Arts industry as a medium to short term alternative to industrialisation, to bring in the needed foreign-exchange (more dollars and pounds) to help strengthen and stabilize the cedi has not caught the attention of government yet.
Technology has made international travels more effective and efficient hence most advanced economies are cashing in on this new market to boost their economies. According to the United Nations World Tourism Organization’s (UNWTO) World Tourism Barometer, in 2013, there were 1.087 billion international tourist arrivals worldwide, with a growth rate of 5.0% as compared to 1.03 billion in 2012. Out of the 1.087 billion international tourists arrivals, U.S had the highest receipts of U.S$139.6 billion out of a total global receipts of U.S$1.07 trillion, and Spain and France with U.S$60.4 and U.S$56.1 respectively in that order.
International tourist arrivals grew by 4.6% in the first half of 2014 according to the latest UNWTO World Tourism Barometer. Destinations worldwide received some 517 million international tourists between January and June 2014, 22 million more than in the same period of 2013.The point is international travels have increased over the years and advanced countries are the most beneficiaries of this new market.
It is very unfortunate that the outbreak of Ebola Viral Disease (EVD) in some countries in West Africa has threatened international visit to West Africa as a whole. But as author Dick Leider defined crisis as life’s ‘wake up’ calls, the outbreak of EVD is a wakeup call for us to up our game in promoting our tourism products to the outside world. The world need to be aware of how free Ghana is from EVD and the measures government has put in place to prevent an outbreak. Lucky enough Ghana is the UN logistic hub for the international fight against Ebola in West Africa. This means easy accessibility to logistics to fight the disease in the event (God forbid) of an outbreak.
People travel for a number of reasons like leisure, business, educational and medical purposes, sports, family, visiting places of interest among others. Most people would visit the U.S and other developed countries because of their level of development which has made life more comfortable and convenient in those countries; hence it is not surprising that these countries always top the chart in international travels and receipts.
What is worth noting is that, people all over the world have the money and means to travel to other countries. What can we do as a country to ensure that we attract at least a quintuple of the Ghana Tourism Authority’s (GTA) projected international tourists visit to Ghana this year? Mind you, according to the GTA, the country expects about a million international tourists this year.
So I am talking about attracting at least 5million international tourists which is insignificant to the 1.087 billion international tourists arrivals recorded in 2013. In 2012, Ghana made about $2.5billion from about 1.3million international tourists who visited the country. If we can quintuple this number, the nation would be making about 12.5billion dollars a year and this could be the deux es machina we ever needed to turn our economy around.
So how can this be done? Using David Ricardo’s Comparative Advantage economic theory, Ghana should focus on developing its unique natural sceneries, cultural and creative art products which are peculiar to it and would give it a financial advantage in the tourism industry. If Ghana decides to build world class universities and hospitals, international travelers have the choice to come to Ghana or not because there are quite a number of them in the world now with much experience.
But developing and marketing our unique natural, cultural and historical sites and products would lessen the competition and make Ghana a more desired place to visit. According to the U.S department of Commerce, National Travel and Tourism Office and the Bureau of Economic Analysis, international visitors to the U.S spent $19.2billion on travel to, and tourism related activities within, in August 2014. Out of this, only 18% ($3.4billion) accrued from those who came to the U.S for educational, medical and short term work purposes. This I think is due to the fact that quite a number of world class educational institutions and hospitals exist outside the U.S too.
The focus should therefore be on peculiar natural, cultural and historical sites and products in Ghana that would give the country a comparative advantage. Most visitors cite the diverse culture of the various Ghanaian communities co-existing peacefully as a major reason for visiting Ghana. This is unique to Ghana and more value can be added to these diverse cultures of the Ghanaian society to attract more foreigners. For instance the architectural designs of houses in the northern half of Ghana which is different from houses built in southern Ghana due to insolation can be given a touch of modernity with the state of the art technology. This could be a learning hub for people in the architectural industry all over the world.
More landmark festivals aside the colourful Odwira festival of the Akuapems, Akwasidae of the Ashantis, and the Easter festivities at Kwahu among others can be created and institutionalised on the tourism calendar. It is for this reason that the recently created Homofest (Homogenous Festival) designed by the Ministry of Tourism, Culture and Creative Arts to bring unity and peaceful co-existence among the Ga traditional communities in the capital city is a step in the right direction and must be commended by all.
The historical Fortes and Castles, slave routes, slave markets inter alia which represent a historical link between Ghana and the rest of the world should be repackaged and marketed to attract more foreigners into the country to learn about the history of the slave trade. Creating and telling the story to involve the outside world would make them desire to know more about their roots. This is why I add my voice to calls on Government to release the Osu castle to the Ghana Museums and Monuments Board for use as their offices as well as for their management as a state of the art heritage tourism facility.
Inventory of all the unique or peculiar natural, cultural and historical sites and products should be taken and prioritise. This will create an institutional memory of the sites and products with the greatest potential to attract more international tourists.
Moreover, an immediate end to the culture of allocating part of the budgetary resources due the Tourism, Culture and Creative Arts sector will help the Ministry and its 14 agencies to be more effective in planning and achieving set targets. Countries such as Turkey, South Africa, Bahamas, Kenya, Panama, etc. did not get to the levels of their development with a slothful attitude to tourism promotion. But wait!!! Do you know something? According to the World Bank 2013 report, Bahamas’ economic prosperity is attributed mostly to its vast tourism sector which accounts for over 60% of the Bahamian Gross Domestic Product (GDP), and creates jobs for more than fifty percent of the country’s workforce.
Hmmm!!! Food for thought
The tourism industry has a huge potential to solve our short to medium term economic challenges including the instability of the cedi. All that is required is the prioritization of the industry and strategic investment.
The writer is a National Service Personnel.