Chinese currency devaluation spells doom for local manufacturers

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August 18, 2015 4:44 PM

" It should be a source of major concern for manufacturers in the country, who are already competing with import substitutes from China. It could be a strategy to collapse the local manufacturing sector"

Many Ghanaian manufacturers are worried about the impact the devaluation of China's currency will have on their businesses in Ghana.

The Chinese Central Bank last week, devalued the Chinese Yuan for the three consecutive days, something that has come as a major concern to other manufacturing and import driven countries across the world, like the United States of America.

But it also ignited a wave of worry on the Ghanaian domestic front, primarily because, Ghana is an import-dependent country who imports heavily from China.

The head of the Banking and Finance department of the the University 0f Ghana Business School, Dr. Godfred Bokpin, in exclusive interview with , said, a country will devalue its currency for many strategic economic reasons. Paramount amongst this will be to make their exports cheaper on the international market. This is the concern of local manufacturers.

When asked how government can respond, Dr. Bokpin said,. " There's nothing much government can do in the short term to forestall the fallout of china's currency on the local market. We are not direct targets, but we may be affected."

Dr. Bokpin charged government to start taking immediate steps to fix the local economy and shore up the manufacturing sector in order to reduce the emphasis on imports.

The banking and finance expert added that China's main aim in the current devaluation is to increase the international marketing status of the Yuan in order to make it accepted by the International Monetary Fund into its basket of reserve currencies, placing the yuan on par with the dollar, euro, yen and British pound, and boosting China’s global stature.

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