Saturday, 11 October 2014

We Must Find A Creative Way To Finance Imports With Ghana Cedis - Through Diasporans

There is a general consensus in the country at large that we must cut down on our imports, and expand our export trade, if we are to prosper as a people. Yet, in the short to medium term, cutting  down our import bill will be a rather tall order.

The question then is: is there a creative way to pay for some of the goods that importers bring into the country - without draining our hard currency reserves?

Could we, for example,  get Diasporans willing to accept payment in Ghana cedis for goods  purchased from them overseas by local importers, to fashion the architecture for such deals with stakeholders  such as the ministry of trade and industry, the various trade associations and the banks?

Perhaps if we looked to the diaspora, importers  might be able to pay for some of the goods they import into the country with Ghana cedis - and ease the pressure created by the strong demand for foreign currency on the local forex markets.

Banks in Ghana could play a crucial role in enabling Ghanaians in the diaspora to pay for some of Ghana's imports - by setting up escrow accounts into which importers pay Diasporans for goods they purchase from them (quoted purchase prices will probably always be on a CIF basis, incidentally).

I will use the business model of a wealthy and brilliant Ghanaian-American couple resident in the U.S. to illustrate the architecture of such deals.

 I do know for a fact that the couple would be happy to accept to have the dollar equivalent in local currency,  paid  into their local bank accounts in Ghana, by Ghanaian importers who purchase some of the different types of goods they stock - such as brand new caterpillar spare parts of the "pre-electronic-age" type - directly from their U.S. warehouse.

In a hypothetical example of a deal, the various spare parts dealers associations at Abbosey Okai could arrange with business-friendly banks like the GN Bank, Unibank, UT Bank, Ecobank and Cal Bank, to set up escrow accounts into which they pay the Ghana cedi equivalent,  of the quoted dollar CIF price,  for the goods they order from the said Ghanaian-American couple's U.S. warehouse.

 (Where necessary - even when the  importers' cash has been secured in the escrow account - the Diasporans could still ask importers to get the participating banks to issue either a bank draft or an irrevocable letter of credit in their  favour, on the importers' behalf, as additional security.)

Naturally, the importers would have to pay all import duties and surcharges themselves at the ports, and take delivery of the goods themselves. The couple stock a variety of American-made products - all of the highest quality: their specialty being the sale of brand new surplus military-grade products.

Alas, having once been burnt badly by offering credit to buyers from Ghana, the couple no longer offer credit. Eventually,  they plan to build their own  warehouses  in Accra, Kumasi and Takoradi, and stock them with some of the goods they stock in their U.S. warehouse.

Stakeholders could fine-tune the business model and perfect it so that all parties involved can benefit from such deals: the Diasporans get paid promptly, and the importers get to pay in Ghana cedis for the imported goods they order from Diasporans.

I am pretty sure that there are many Ghanaians who could also come up with variations of this particular business model, which enables importers to pay for goods imported from Diasporans in Ghana cedis.

 One hopes that the new trade and industry minister, the dynamic Dr. Ekow Spio Garbrah, will take a look at the idea, and make it work for Mother Ghana. It is a simple and creative way to pay Ghana cedis for imported goods purchased from Diasporans - many of whom would welcome the opportunity to contribute positively to the growth of Ghana's GDP. A word to the wise...

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