The economy of Ghana is saturated in terms of management of funds to the extent that investing in commercial banks’ short term investment is becoming more and more lucrative.
The average short term deposit rates of the United States of America and United Kingdom, two of World’s advanced economy’s is less than 1%.
However, the average investment rate in Ghana as at December, 2016 was around 8% across the commercial banks and even higher among savings and loans and microfinance with obvious reasons being the risk and net worth of these institutions.(
It is even expected to go down further due to a new Government’s policy not to borrow excessively from the general public through the issue of Government’s treasury bills. The current treasury bill rate for 91 days hovers around 15%. This is a drop from 22% in October.

The more risk loving individuals will continue to invest in the other Class 2 financial institutions as classified by Bank of Ghana. These includes Microfinances, Savings and Loans, Finance Houses etc.
Some of these Class 2 financial institutions continue to give appealing and enticing investment rates which are sometimes difficult to turn down no matter your level of enlightenment.
However, for the majority there are no other options than to leave their funds at the relatively lower deposit rates with the commercial banks.
Is there any other alternative for the investor like me who doesn’t want to go through the hustle of running transport business, going into real estate or following up proceedings on the stock market?
An option usually forgotten but utilized by our friends along the various markets is the foreign currency business popularly called Dollar business (black market dealings).
There are some economic projections that our local currency would start performing well against the other major currencies. This is great news for the importer and majority of Ghanaians.
On the other hand, this is a funeral moment and continuous gnashing of teeth for foreign currency dealers.
Their business is built on speculations. Correct speculation brings enormous financial gain and the reverse is true. They buy and hide foreign currencies when they sense a potential appreciation of foreign currencies against the local currency.
They either hoard them at home or keep them in their bank accounts awaiting a potential drop in the aforementioned rates before they reconvert them into the local currency.
This is smart move which demands commendation not condemnation in my view.

There are three avenues to get hold of these foreign currencies in Ghana. The first one is the almighty black market or popularly known as the Alhaji market. This is made up of our brothers’ who stand around market centres to exchange cedi for the foreign currencies.
The notable Alhaji markets’ in Ghana are the Tema Community 1 market, Malata Market, Kumasi Central Market, Agbogbloshie to mention few.
Individual dealers can also purchase their foreign currencies from the wide spread forex bureaus in the country. The last option is getting them from the commercial banks who are sometimes reluctant to provide these currencies.
As the foreign exchange rates went up from 1.12 in 2009 to about 4.2 as at December, 2016 many Alhaji’s couldn’t hide their joy. There were intermittent drops in rate along the line. But overall, smart foreign currency investors recouped on their investment sometimes as much as 50%. Graph below shows the upward trend of our cedi as against the US dollar since Sept, 2016 to 21st Feb, 2017.

A cursory look favors the forex business. The rate moved from 3.92 in September, 2017 to 4.35 in November, 2016. There was however a sharp decline in rate at the beginning of December, 2016. Before the dealers could think of realizing on their investment, the rates shot up again leading to the fluctuating trend as seen from the chat above.
A potential drop in rate in future as anticipated will however hamper the fortunes of dealers.
The sustainability of this projected drop however remains a question for another day.
This is one business that we all need to look at and work around the clock to invest going forward.
With that said, it is also a venture that demands constant monitoring and permutations.
The forex bureau will become your friend as well as Bank of Ghana website if you really want to enter into this industry.
If you are however faint hearted like me, then I advise you find a credible commercial bank and investment you surplus funds at a respectable rate!
Author: Patrick Baah.