It said: "Despite the market's strong fundamentals, including a track record of private investment in energy infrastructure, comparatively high political stability and security, and a relatively diverse competitive landscape, we expect that a substantial depreciation of the cedi against the USD in 2022 will, in the near term, make private investors more reluctant to invest in Ghana's infrastructure sector."
Fitch Solutions, a research arm of rating agency Fitch, has indicated that the continuous depreciation of the local currency against major currencies will make private investors more reluctant to invest in Ghana's infrastructure sector.
Nana Addo and Mahamudu Bawumia
"We, thus, do not expect that private investment will meaningfully cushion the negative impact of subdued public infrastructure spending on the market’s construction industry growth”, the agency said, adding: “We forecast that in 2022, the Ghana cedi will depreciate by 22.7% against the USD, significantly increasing revenue risks for the foreign investors that rely on expatriation of revenues," it stated.
On n Monday, May 30, 2022, the Governor of the Bank of Ghana, Dr. Ernest Addison said the confidence in the cedi is beginning to manifest because of the drastic measures instituted by the Central bank.
According to him, measures being put in place by the Bank of Ghana to halt the dwindling fortunes of the Cedi appear to be making headway as the local currency has stabilized significantly against the dollar and other foreign currencies.
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He said the monetary policy rate hikes, reversal of the regulatory reliefs, and the announcement effect of the fiscal measures have impacted positively on the FX market, and the local currency has regained some of the first-quarter losses.
Speaking at the 6th Ghana CEO Summit on Monday, May 30, 2022, Dr. Addison explained that although growth prospects remain positive, the macroeconomic challenges have dampened consumer and business confidence in the domestic economy.
He said "The upside risks to the inflation outlook are significant, and the second-round effects of upward adjustments in ex-pump prices and possible utility tariffs could further amplify inflation pressures in the outlook. We have heard several arguments by stakeholders on the Bank of Ghana’s response to the inflation problem, with some stakeholders arguing that these supply-side shocks cannot be resolved by raising the policy rate, especially because the inflation we are experiencing is imported.
Fitch in its rating has also ranked Ghana as the most attractive West African trade and investment destination.
With a Trade and Investment Risk score of 50.9 out of 100, Ghana outperforms the West African average of 36.4 and ranks at a competitive second position regionally.
