Evolution of the Ghana cedi – six decades on from independence Featured

Background

History has it that, even before Dr Kwame Nkrumah’s declaration of independence from the British colonial powers on 6 March 1957, the Gold Coast, now Ghana, had laid a solid foundation for economic/social take-off and smooth governance. Now, there was an urgent need to establish a central bank to, as it were, give “true meaning” to political independence.

Consequently, the Bank of Ghana was founded just before independence, on 4 March 1957, and was mandated to issue and redeem banknotes and coins. Before the creation of this new institution, the West African Currency Board (WACB), which was constituted in 1912 by the British colonial government, issued and circulated the West African pound (£WA) in the Gold Coast and the other anglophone countries of West Africa, with the exception of Liberia. After independence, West African pounds, shillings and pence remained the units of currency in Ghana until the first currency reform, in July 1958, when the Bank of Ghana issued the Ghana pound (£G) as the main currency to consolidate political independence.

In 1965, another currency reform took place as Ghana adopted the widely accepted decimal system for its new currency issue, named the “cedi”. The word “cedi” was derived from the Akan word “sedie”, meaning cowry shell, one of the commodities widely used as a medium of exchange (currency) for transactions before the colonial era. The third and fourth currency reforms, in 1967 and 1972, were both undertaken after a military coup d’état, reflecting the political and economic uncertainity in that period. The subsequent 1979 currency reform, in which the cedi was rediscounted, was used mainly as a tool to control liquidity.

One common feature of the aforementioned currency reforms was that they were used as either a monetary policy tool or a tool to achieve some political motive. The implementation of the reforms had unintended consequences, as certain citizens lost money through the processes of demonetisation and discounting of money. Unlike the various currency reforms, the redenomination undertaken in 2007 was not done as part of a stabilisation process, but rather to reflect stability as well as a strong commitment to good governance.

Ghana has witnessed several currency reforms from 1912 to date. As the country celebrates the 63rd anniversary of its independence, we catalogue the various changes to our money over the past six decades to commemorate the occasion.

Currency Reform Processes in Ghana

⦁ First Currency Reform

With independence, the West African pound, introduced by the WACB, came to be regarded as a vestige of British colonialism which had to be changed. Consequently, in July 1958, the new Bank of Ghana introduced our first truly national currency, called the Ghana pound, shillings and pence, to replace West African shillings and pence. These were the denominations:

No            Banknotes            Coins

1          10 shillings              ½ penny
2          1 pound                  1 penny
3          5 pounds                 3 pence
4          1,000 pounds          6 pence
               (for interbank transactions)
5                                          1 shilling
6                                          2 shillings

Note: 12 pence were equal to 1 shilling and 20 shillings were equal to 1 pound.


⦁ Second Currency Reform – cedi (₵) and pesewa (p)

Barely three years after the introduction of Ghana pounds, shillings and pence, the government initiated a move to adopt the widely accepted decimal currency system. A body (the Kessels Committee) was set up to design a roadmap for the migration.

In early 1965, the then Minister of Finance, Mr Akwasi Amoako Attah, announced the government’s decision to introduce a decimal currency system into the country. The proposed banknotes were named the “cedi” and the corresponding coin was the “pesewa”. The various denominations listed below were issued in July 1965. All the banknotes and coins bore the portrait of the first President of the Republic of Ghana, Dr Kwame Nkrumah.

No            Banknotes            Coins

1              1 cedi                 5 pesewas
2              5 cedis               10 pesewas
3              10 cedis             25 pesewas
4              50 cedis             50 pesewas
5              100 cedis
6              1,000 cedis

Note: 1 cedi was equivalent to 8 shillings and fourpence (8s 4p), while 100 pesewas was equal to 1 cedi. The penny coin was allowed to circulate for a while alongside the 1 pesewa.


⦁ Third Currency Reform – the new cedi (N₵)

The overthrow of the Convention People’s Party (CPP) government in 1966 led to a decision to replace the existing currency, ostensibly to do away with the portrait of Dr Kwame Nkrumah on the currency. In February 1967, a new currency was issued without the portrait of the former President and the designation of the new banknotes was varied to make it the “new cedi” (N₵). However, “pesewa” was maintained for the new coins. The denominations introduced in 1967 consisted of:

No            Banknotes            Coins

1             1 cedi                 ½ pesewa
2             5 cedis               1 pesewa
3             10 cedis             2½ pesewas
4                                        5 pesewas
5                                       10 pesewas
6                                       20 pesewas

Note: 1 new cedi was equivalent to 1 cedi and 20 pesewas of the old cedi (N₵1 = ₵1.20). The old and new cedi notes and coins circulated simultaneously for three months before the old tender was demonetised in May 1967.


⦁ Fourth Currency Reform – the cedi (₵)

The fourth currency issue occurred in February 1972 after the military coup d’état which overthrew the government of the Second Republic, led by President Edward Akufo-Addo and Prime Minister Kofi Abrefa Busia. A committee was formed, under the chairmanship of Jonathan Herbert Frimpong-Ansah, the then Governor of the Bank of Ghana, to oversee the reissue of the cedi without the new cedi (N₵) symbol. Subsequently, the newly introduced banknotes became known simply as “cedis”. The various denominations of this cedi are as presented below.

No            Banknotes

1               1 cedi
2               2 cedis
3               5 cedis
4               10 cedis

Note: Other, higher denominations of the cedi with different portraits were introduced between 1973 and February 1979.


⦁ Fifth Currency Reform

On 9 March 1979, the government announced the introduction of new cedi notes to replace the existing ones at a discount of 30 per cent for amounts up to ₵5,000 and 50 per cent for amounts in excess of ₵5,000. The old currency was taken out of circulation and ₵50 banknotes were confiscated. However, cash already lodged in bank accounts was neither confiscated nor discounted. The newly introduced denominations were as follows:

No            Banknotes            Coins

1               1 cedi               50 pesewas
2               2 cedis             1 cedi
3               5 cedis
4               10 cedis
5               20 cedis
6               50 cedis


⦁ Sixth Currency Reforms

In 1982, the Bank of Ghana issued another suite of new cedi notes, of the same denominations but with new designs, colours and enhanced security specifications, to replace the 1979 issue. The most notable aspect of the 1982 issue was the reintroduction of a ₵50 note, scrapped in 1979. In 1984 new and higher denominations of the cedi, namely ₵100 and ₵200 banknotes, were introduced. And in 1986, the Bank of Ghana issued another high denomination – the ₵500 note –eventually phasing out the ₵1, ₵5, ₵10 and ₵20 notes and replacing them with coins. By 1986, the structure of denominations had changed to:

No            Banknotes            Coins

1              50 cedis                 1 cedi
2              100 cedis               5 cedis
3              200 cedis              10 cedis
4              500 cedis              20 cedis

In 1991, the Bank of Ghana introduced the ₵1,000 banknote and converted the ₵50 and ₵100 banknotes into coins. The central bank then introduced the ₵2,000 and ₵5,000 banknotes in 1994 and further changed the currency’s structure by converting ₵500 and ₵200 to coins. In August 2003, the Bank also brought the ₵10,000 and ₵20,000 notes into circulation, making ₵20,000 the highest cedi denomination. The ₵20, ₵10, ₵5 and ₵1 coins were phased out. The currency structure was as follows:

No            Banknotes            Coins

1          1,000 cedis                50 cedis
2          2,000 cedis                100 cedis
3          5,000 cedis                200 cedis
4          10,000 cedis              500 cedis
5          20,000 cedis


⦁ Seventh Currency Reform – redenomination of the cedi

After decades of high inflation, the banknotes in circulation increased over 9,000-fold from the levels of the 1970/80s, resulting in the numerical values of the local currency running into millions, billions and trillions. These multiple zeros on the currency caused difficulties in expressing monetary values, with transactions at cashiers’ offices, with bookkeeping and statistical records, with data processing software, in managing payment systems and price tagging, as well as for the credibility of the cedi, given that certain basic economic aggregates were expressed in trillions. In the light of these problems, simplifying monetary aggregates was deemed a technical necessity.

The Bank of Ghana therefore decided to redenominate the local currency by removing four zeros. The redenomination exercise featured an intensive nationwide sensitisation campaign and was meant to remove the deadweight burden on the economy. The redenomination aimed to put a hard wire around economic reforms taking place at that time, and served as an important tool to promote efficiency in the way business was done in Ghana. The redenomination was also expected to reposition the domestic currency to play an effective functional role as the means of exchange, store of value, unit of account and standard for payment, both within and outside the banking system.

Starting in July 2007, new banknotes and coins were issued and renamed the Ghana cedi (GH₵) and Ghana pesewas (Gp). Both the “old” cedi (₵) and Ghana cedi (GH₵) notes and the old pesewa and Ghana pesewa (Gp) coins were in physical circulation for six (6) months before the “old” cedi notes were withdrawn from circulation. By the end of 2007, all banknotes and coins issued before the redenomination exercise were demonetised.
The new currency structure was as follows:

No           Banknotes              Coins

1          1 Ghana cedi             1 pesewa
2          5 Ghana cedis           5 pesewas
3          10 Ghana cedis         10 pesewas
4          20 Ghana cedis         20 pesewas
5          50 Ghana cedis         50 pesewas
6                                              1 cedi


Additional Currency Reforms

In March 2010 the GH₵2 note was introduced by the Bank of Ghana to commemorate the previous year’s centenary celebration of the birth of the first President of the Republic of Ghana, Dr Kwame Nkrumah.

Due to high counterfeiting rates of the GH₵50 note during 2010/11, the Bank of Ghana introduced an upgraded GH₵50 banknote with enhanced security features in August 2012. Five years later, in March 2017, a new GH₵5 note was also introduced by the Bank of Ghana as a commemorative banknote to mark the 60th anniversary of the Bank’s establishment.

To further improve the security features of all existing banknotes and guard against counterfeiting, the Bank of Ghana introduced upgraded versions of all Ghana cedi banknotes, with the exception of the commemorative notes (GH₵2 with Dr Nkrumah’s portrait and GH₵5 with the portrait of Dr Kwegyir Aggrey), in May 2019. The upgraded Ghana cedi banknotes maintained the original designs: colour, size, vignettes and images.

The most recent addition to the family of Ghana cedi banknotes occurred in November 2019, with the introduction of the new GH₵100 and GH₵200 banknotes as well as a GH₵2 coin by Bank of Ghana. This was done to ensure customer convenience, improve efficiency of cash printing, and support other currency management activities. It was also meant to reduce the deadweight burden and high transaction costs associated with high-value purchases in a predominantly cash-based economy such as Ghana.

Conclusion

The Bank of Ghana’s exclusive mandate to issue banknotes has been well executed over the years, given the exigencies of each period. The Bank has specifically enhanced its education campaigns on money in circulation and enhanced the currency’s security features to ensure that counterfeiting is minimised. These measures will ensure that the banknotes and coins maintain their functional roles as a medium of exchange, store of value, and unit of account.

Ghana’s Money

Selected images of legal tender issued, from the era of the WACB onwards, are shown below:

⦁ 1958 – 1965

Banknotes

Coins

⦁ 1965 – 1967

Banknotes