President Mahama has resurrected the charges of impropriety, malfeasance, corruption hanging around the neck DrMahamudBawumia, the former Deputy Governor of the Bank of Ghana and current running mate of the New Patriotic Party.
There are questions yet to be unanswered by DrBawumia who supervised the redenomination of the Ghanaian currency, the cedi during the Kufuor Regime.
Many Economists and political commentators have faulted the haphazard nature of the exercise with some saying it is the cause of the myriad of problems of the Ghanaian economy.
A former Director General of the Ghana Health Service, Prof. Agyeman Badu Akosa blamed the 2007 redenomination for the country’s current economic challenges.
According to him Ghana failed to sort out the fundamentals before the exercise was carried out. ‘’I think that the reality of the situation is that if you don’t fix the fundamentals of your economy you cannot under any circumstances guarantee the stability of your currency,’’ he said.
Professor Badu Akosa added that ‘’the micro underpins the macro and if the micro is wrong, the macro cannot be right.”
If the NPP running mate thought he had laid to rest the redenomination albatross hanging round his neck, he was in for a shock when President Mahama resurrected the issue during a campaign tour of parts of Accra Tuesday.
President John DramaniMahama challenged running mate of the opposition New Patriotic Party (NPP), Dr. MahamaduBawumia to reveal the cost of the cedi redenomination exercise in 2007.
Speaking at a rally in the Ablekuma North constituency, President Mahama said since Dr. Bawumia was a Deputy Governor of the Bank of Ghana at the time the cedi redenomination was carried out, he should be able to tell Ghanaians how much it cost government to undertake the exercise.
“Do we remember the cedi redenomination under President Kufuor. During that time, someone [Bawumia] was the Deputy Bank of Ghana and uptill now, even me as a President do not know the cost of the redenomination exercise.
In what appears to be a clear response to the opposition NPP’s claims that he is incompetent, the President also indicated that the party has no right to label him as such when it is unable to give full account of a simple redenomination exercise.
“Uptill today, no Ghanaian knows the cost of the redenomination exercise and the same people come and say someone is incompetent. When you redenominated the cedi how much did it cost us? Simple things like these you cannot tell us and you have the nerve to come and talk about corruption. Look in the mirror and look at yourselves.
“Take the log out of your eye before you point at the mote in somebody’s eye. Only God doesn’t make mistakes. I am human, I am not God. I am not saying I have done so much but I have done what I can and if others say they have not noticed what I have done, God who is in heaven is my witness and he sees the good works NDC has done.”
Ghanaians will recall that on July 3, 2007 ex-President Kufuor assembled a team led by Bawumia, which redenominated the national currency (Cedi) at a base value of 100. Following the redenomination, the team led by Bawumia were to burn or destroy the old cedi notes that had been collected from Ghanaians.
But unbeknown to many Ghanaians, Bawumia had other diabolical plans. After collecting the huge sums of old cedi notes that were meant to be destroyed, this man Bawumia secretly turned around, and went and gave a huge chunk of them to Nana Akufo-Addo as his contribution towards his 2008 presidential campaign. This is not a conspiracy theory. It is not lies but purely the truth.
After Akufo-Addo had received the windfall of the old cedi notes from Bawumia, he sent his emissaries who went to change the money and got the new Ghana Cedis at a huge loss to the state.
But this brazen thievery by Bawumia did not go without a reward. Akufo-Addo immediately sent his cohorts to do a background check on Bawumia, and after they have spoken with Bawumia and realized that he could be of “substance” to Akufo-Addo they recommended Bawumia to be his running mate.
That was the reason why for the first time in the history of the NPP, somebody who did not even have the party’s membership card let alone having natured the party was hurriedly pushed to the second topmost position of the party against lots of protestations from key members of the party. Bawumia, the so-called “economic wizard” of the NPP paid his way to become the running mate of Akufo-Addo by stealing from the state to support Akufo-Addo.
The Bank of Ghana (BoG) iredenominated the cedi in July 2007. BoGi set ten thousand cedis to one new Ghana cedi.
According tot the Bank, the cedi redenomination became necessary as a result of years of decline in the currency’s value. In 1982, for example, the US dollar exchanged for 2.78 cedis. Now the dollar exchanges for about 9100 cedis. The redenomination is being carried out now as part of the government’s efforts to convince citizens and markets that hyper-inflation is a thing of the past. Inflation was as high as 116% in 1977, 117% in 1981 and 123% in 1983. Now inflation has been reduced to about 12%. The redenomination is also being carried now in order to re-align the cedi with other currencies in the West African region as ECOWAS member countries move to a common currency, the Eco.
Currency redenomination also can be a means by which some governments attempt to reassert their monetary sovereignty. If citizens lose confidence in the national currency, they may begin to use foreign currencies, particularly those with greater prestige. This may be both a psychological and an economic blow to the government: with widespread foreign currency substitution (or, more extremely, full dollarization), the central bank no longer controls the money supply, rendering it unable to provide lender of last resort functions.
A country’s economic policy is influenced not only by international capital markets, but also by foreign central banks. Currency redenomination, then, is a means by which governments can attempt to reverse this currency substituting behavior: if citizens are confident that the new Ghanaian cedi will hold its value, they may be willing to shift from using euros and dollars to using cedi. This is the psychological effect of redenomination.