The Ghana cedi is the unit of currency of Ghana. The new Ghana cedi was introduced on
1 July 2007 at a rate equal to 10,000 old cedis. It was the highest-valued currency
unit issued by sovereign countries in Africa in 2007.
One Ghana cedi is divided into one hundred Ghana pesewas. A number of Ghanaian coins
have also been issued in "sika" denominations. These are probably best considered as "medallic"
coinage, and may have no legal tender status. The word sika means "money".
Etymology The word cedi is derived from the Akan word
for cowry shell which were once used in Ghana as a form of currency.
History
First cedi, 1965–1967 The first cedi was introduced in 1965, replacing
the pound at a rate of 2.4 cedi = 1 pound, or 1 pesewa = 1 penny. The first cedi was
pegged to the British pound at a rate of 2.4 cedis = 1 pound.
Second cedi, 1967–2007 The first cedi was replaced in 1967 by a "new
cedi" which was worth 1.2 first cedis. This allowed a decimal conversion with the pound,
namely 2 second cedis = 1 pound. The change also provided an opportunity to remove Kwame
Nkrumah's image from coins and notes. The second cedi was initially pegged to the
British pound at a rate of 2 cedi = 1 pound. However, within months, the second cedi was
devalued to a rate of 2.45 second cedi = 1 pound, less than the value of the first cedi. This
rate was equivalent to 1 cedi = 0.98 U.S. dollars and the rate to the dollar was maintained
when the British pound was devalued in November 1967. Further pegs were set of $0.55 in 1971,
$0.78 in 1972, and $0.8696 in 1973 before the currency was floated in 1978. High inflation
ensued, and so the cedi was re-pegged at ₵2.80 = $1.00.
Inflation continued to eat away at the cedi's value on the black market. In the early eighties,
the government started cracking down hard on the retail of products at prices other
than the official established sale price. This had the effect of driving nearly all
commerce underground, where black market prices for commodities were the norm, and nothing
existed on store shelves. By 1983 the cedi was worth about 120 to one U.S. dollar on
the black market, a pack of cigarettes cost about ₵150, but the bank rate continued
at ₵2.80 = $1.00. Finally, with foreign currency completely drying up for all import
transactions, the government was forced to begin a process of gradual devaluation, and
a liberalization of its strict price controls. This process ended in 1990 with a free float
of the cedi against foreign currencies. Inflation continued until by July 2007, the cedi was
worth about 9500 to one US dollar, and a transition to the third cedi was initiated.
In 1979 a currency confiscation took place. New banknotes were issued which were exchanged
for old at a rate of 10 old for 7 new. Coins and bank accounts were unaffected.
A second confiscation took place in 1982, when the ₵50 note was demonetized. Ghanaians,
in theory, could exchange any number of ₵50 notes for coins or other banknotes without
loss, but foreigners could not make any exchange. However, many Ghanaians who were hoarding
large amounts of cedis feared reprisal if they tried to convert all of it, and so simply
burned a lot of their money. Many other Ghanaians received "promise payment notes" from the
banks, but never received compensation. This confiscation was publicly justified as a means
to create a disincentive for the flourishing black market. However, from a monetary perspective,
currency confiscations have the effect of reducing the available cash in the economy,
and thereby slowing the rate of inflation. After the ₵50 note confiscation, the ₵20
note was the highest cedi denomination, but had a street value of only about $0.35
After the ₵50 note confiscation, fears existed that the government could also confiscate
the ₵20 or even the ₵10 notes. This fear, along with inflation running at about 100%
annually, started causing Ghanaian society to lose its faith in its own currency. Some
transactions could only then be done in foreign currencies, and other more routine transactions
began to revert to a barter economy. Coins
First cedi The first cedi coins were issued in denominations
of 5, 10, 25, and 50 pesewas. Smaller denominations such as the ½ and 1 pesewa became obsolete.
Second cedi In 1967 coins for the second cedi were introduced
in denominations of ½, 1, 2½, 5, 10, and 20 pesewas. In 1979 coins for 50 pesewas and
1 cedi were introduced. These were replaced in 1984 by smaller types alongside a new 5 cedi
coin. All these early issues have since fallen out of circulation due to inflation.
In 1991, 10, 20, 50, and 100 cedi coins were introduced, followed by 200 and 500 cedis
in 1996. These six denominations were still in circulation till 2007. However, the 10
cedis and 20 cedis coins were not seen much due to their small value.
Third cedi The new coins are 1 pesewa, 5 pesewas, 10
pesewas, 20 pesewas, 50 pesewas, and 1 cedi. Banknotes
All Ghanaian banknotes are issued by the Bank of Ghana.
First cedi On 19 July 1965, pounds, shillings, and pence
were replaced by cedi notes in values of ₵1, ₵5, ₵10, ₵50, ₵100, and ₵1,000.
Second cedi The first issue of banknotes, dated 1967,
was in denominations of ₵1, ₵5, and ₵10. A second series, introduced in 1972 and 1973,
consisted of ₵1, ₵2, ₵5, and ¢10 notes. The 1979 series, for which old notes were
exchanged at a reduced rate consisted of ₵1, ₵2, ₵5, ₵10, ₵20, and ₵50 banknotes.
In 1983 a new banknote series was introduced in denominations of ₵10, ₵20, ₵50, ₵100,
and ₵200 cedis. Higher denomination banknotes were later introduced: ₵500, ₵1,000, ₵2,000,
₵5,000, ₵10,000, and ₵20,000. In 2005, banknotes in circulation were ₵1,000, ₵2,000,
₵5,000, ₵10,000, and ₵20,000. First series
Second series Third series
Fourth series Third cedi
The new currency is denominated in Ghana cedi, a unit equal to 10,000 old cedi, and Ghana
pesewa, equal to one-hundredth of a Ghana cedi or 10,000 old pesewa. From the beginning
banknotes was issued in GH₵1, GH₵5, GH₵10, GH₵20, and GH₵50 denominations. Old currency
were withdrawn beginning in July 2007, and after a six month transition it could only
be exchanged at banks and was no longer legal tender. The Bank of Ghana launcheded a website
on this re-denomination campaign. On 14 May 2010 a GH₵2 banknote was issued to meet
public need for an intermediary denomination and reduce the frequency, and associated cost,
of printing large volumes of the GH₵1 banknote. The introduction of the new denomination coincides
with the conclusion of the year-long centenary celebrations of the birth of Kwame Nkrumah,
Ghana’s first president, and has the commemorative text “Centenary of the Birth of Dr. Kwame
Nkrumah". By June 2014 the third Cedi had lost 70 procent of its original value.
Exchange rate history
Note: Rates obtained from these websites may contradict with pegged rate mentioned above
See also Highest-valued currency unit
Economy of Ghana Previous Ghana currencies:
British West African pound Ghanaian pound
References
External links Information on the Cedi, Bank of Ghana
Information on the new cedi issue