Curbing Dollarization: Why Ghana’s Legal Crackdowns Will Just Be Chasing Shadows Without Any Success

Ghana’s legal crackdown on dollarization misses the mark, as fear, distrust, and economic instability drive the dollar habit. Real change requires restoring confidence through consistent policy, competitiveness, and a stronger, more credible cedi.

Although the Bank of Ghana’s Governor, Dr. Johnson Asiama, has vowed to enforce the country’s laws on dollarization to curb the menace, IMANI Africa believes that the approach might just be a hoax.

It has become normal that in the busy Makola market, tomatoes are priced in cedis, but rent is whispered in dollars. Many hospitality services, some retail outlets, and real estate companies price in dollars in contravention of the country’s foreign exchange laws.

The Bank of Ghana is on an anti-dollarization campaign to clamp down on the menace using the legal provisions.

It is worth noting that this is not the first time the BoG has attempted to end the menace using this same approach. However, the dollarization canker refuses to die. It simply relocates to WhatsApp, to forex back rooms, to the shadowy corridors of business negotiations.

Why is the dollarization refusing to die despite the efforts? IMANI Africa explains that it is because the dollar is not just a currency in Ghana; it is therapy, insurance, and tradition wrapped in one.

You don’t “crack down” on what is, for many, a psychological life raft. IMANI believes you can’t outlaw the dollar habit in just a twinkle of an eye. 

The public policy think explains that businesses and individuals have been accustomed to persistent depreciation of the Ghana Cedi, the vanishing savings, and the panic at the forex bureaus.

Many still bear those scars, so when some businesses dollarize their operations, they are not breaking the law; they are obeying experience.

In IMANI Africa’s recent criticality analysis of the canker, it emphasized that the problem isn’t just dollarisation. It’s distrust. It’s not that Ghanaians love the dollar; it’s that they fear the cedi.

“Legal crackdowns, however, won’t succeed without tackling the deep behavioral drivers of dollarisation. Ghanaians, especially businesses, don’t just chase the dollar for convenience, they chase it out of fear, experience, and habit. Many remember past periods when the cedi collapsed and holding dollars has become a psychological hedge, a form of insurance,” the think noted.

It added that, “many citizens and businesses don’t trust the cedi, but they also don’t understand what the government is doing to change that. Even in good times, businesses assume the cedi will eventually slip again, so they default to the dollar.

And what is the government offering in exchange to win their trust in the cedi? Just speeches, legal threats, and talks of patriotism.

For IMANI, it is ironic that the state wants Ghanaians to believe in the cedi, even as the economy constantly teaches them not to. Policy U-turns, fiscal overspending, inflationary habits, and import addiction all undermine the very faith authorities are now demanding.

At the heart of this currency tug-of-war is Ghana’s competitiveness crisis. If the economy doesn’t earn enough dollars through exports, investment, or value addition, people will find ways, legal or not, to get them elsewhere. That’s not speculation. That’s survival.

So yes, dollarisation is a problem. But it’s a symptom, not the disease. And spraying symptoms while ignoring the cause only creates more informal market activity.

IMANI strongly recommends that if the government is serious, then the fight must go beyond laws. It must fix the fundamentals, such as stable inflation, enforce rules fairly, support local production, boost exports, and above all, earn back public trust.

“Dollarization isn’t just a bad habit; it’s a symptom of deeper weaknesses: policy inconsistency, weak public trust, poor enforcement, and low competitiveness. Trying to eliminate dollarisation without fixing these will only lead to more informal market activity and financial distortions,” portions of IMANI’s analysis read.

Until then, IMANI insists the canker of dollarisation won’t vanish. It will always be around.

Source :The High Street Journal/Fredrick Addai Kwarteng