Introduction
In early 2025, the Ghanaian Cedis appreciated by 26 percent against major international currencies, marking one of its most notable recoveries in recent years (Bloomberg, 2025). The Cedis has also been described variously as the best performing currency in the world. This impressive performance has been attributed to a combination of interventions by the Bank of Ghana, increased export revenues, and stricter monetary policy measures (Bank of Ghana, 2024). While this trend has generated optimism among financial and policy experts, it raises a critical question: Does a temporary rise in currency value lead to long-term national security?
This article contends that, although currency appreciation can offer macroeconomic relief, it fails to address the underlying socio-economic and institutional weaknesses that affect national security results. In vulnerable and underdeveloped areas of Ghana, the impacts of exchange rate fluctuations continue to be felt. These impacts affect local economies, influence trust in governmental institutions, and, in some instances, offer leverage to non-state actors, including extremist groups. Therefore, a sustainable national security strategy must view currency stability not as a solitary achievement but as part of a larger economic-security framework.
Macroeconomic Recovery and Structural Fragility
A stable or appreciating exchange rate can help lower import expenses, lessen inflationary pressures, and enhance conditions for debt management. Recent figures from the Ghana Statistical Service (2023) indicate that inflation rates have decreased, providing some relief to families. However, these improvements do not eliminate Ghana’s inherent vulnerability to external shocks. As a nation that exports commodities, Ghana’s currency is closely linked to the price fluctuations of items like cocoa, crude oil, and imported fuels. Yeboah et al. (2025) illustrate that the connection between exchange rates and commodity prices in Ghana is not symmetrical, with specific price hikes (such as diesel and petrol) leading to currency depreciation, while others (such as cocoa and crude oil) tend to support currency appreciation.
These fluctuations create challenges for fiscal planning, particularly regarding national security budgets. The acquisition of surveillance systems, advanced military equipment, and logistical support often relies on foreign exchange markets. In the absence of stable currency performance or suitable hedging strategies, the government faces heightened cost pressures and diminished ability to enact proactive security initiatives. Onyshchuk et al. (2020) note that financial instability can result in reduced institutional efficiency, constrained absorptive capacity, and delays in service provision, all of which adversely affect national resilience.
Currency Volatility and the Security Landscape
The implications of exchange rate instability for national security are particularly severe in the marginalized areas of Ghana, where socio-economic vulnerability is already prevalent. Research indicates that disenfranchisement economically plays a significant role in fueling radicalization and the recruitment efforts of violent extremist groups (African Center for Strategic Studies, 2023). In northern and upper eastern regions of Ghana, numerous communities grapple with ongoing unemployment, insufficient infrastructure, and a minimal state presence. In these circumstances, shocks from inflation and currency depreciation impair household purchasing power, increase public discontent, and enhance the appeal of extremist ideologies.
Yeboah et al. (2025) observe that inflation and exchange rates in Ghana are interlinked in a continuous cycle. Inflation results in currency depreciation, which in turn drives additional inflation. This feedback loop intensifies vulnerabilities by undermining local livelihoods and constraining the government’s fiscal capacity to implement social interventions. Furthermore, the lack of specific economic recovery initiatives aftershocks allows these detrimental effects to persist long after currency stabilization.
Border insecurity additionally complicates the situation. Differences in exchange rates between Ghana and its neighbors, such as Burkina Faso and Togo, create incentives for illicit cross-border activities involving fuel, foreign currency, and consumer goods. The Global Initiative Against Transnational Organized Crime (2023) highlights how these informal economic operations are frequently taken advantage of by organized crime networks and armed factions operating in the Sahel region. In Ghana, such activities threaten national integrity and undermine the efficacy of law enforcement in border areas.
Public Trust, Institutional Risk, and Strategic Communication
Macroeconomic performance plays a significant role in shaping public perceptions of state effectiveness. When the cedi strengthens, there is an increase in expectations regarding improvements in living standards. However, if these expectations are not fulfilled through lower prices or enhanced public services, it can lead to greater public dissatisfaction. This disconnect creates a conducive environment for the spread of misinformation, conspiracy theories, and anti-government sentiments. Such a situation is particularly perilous in vulnerable areas where extremist groups may take advantage of these feelings to recruit supporters or undermine local authority.
Onyshchuk et al. (2020) assert that nations with weak financial regulations and low trust in institutions are at a higher risk for national security threats arising from economic instability. In Ghana, misinformation during times of inflation and currency depreciation has already fueled political divides and doubts about economic management. Yeboah et al. (2025) further note that the irregular relationship between inflation and currency fluctuations generates uncertainty that complicates even well-conceived macroeconomic strategies.
Consequently, strategic communication should be a fundamental component of currency management. Policymakers and central authorities must proactively clarify the reasons behind currency fluctuations, their effects on domestic markets, and the government’s actions in response. This involves utilizing local media and reputable civil society groups to share accurate information, particularly in rural or low-literacy communities.
Policy Recommendations
To address the national security challenges linked to currency fluctuations, Ghana needs to weave foreign exchange (FX) volatility into its broader security and development strategies. The following are expanded policy suggestions:
Incorporating Foreign Exchange Risk into Security Planning
The Ministry of National Security, the Ministry of Finance, the Bank of Ghana ought to work together to incorporate foreign exchange risks into national threat evaluations. This entails creating economic risk dashboards and early warning mechanisms to identify vulnerabilities related to currency fluctuations. The findings should guide contingency strategies and financial safeguards for essential security activities. By aligning macroeconomic and security data, it will enable quicker and more flexible responses in the event of currency crises.
Upgrading and Formalizing Border Trade
Dependence on unofficial trade routes near Ghana’s northern borders weakens revenue generation and encourages illegal activities. Upgrading border facilities with advanced customs and surveillance technologies will strengthen monitoring. Creating formal trading centers can decrease smuggling by providing safer and more lucrative options. These actions bolster state authority and promote regional economic unity (Global Initiative, 2023).
Creating Hedged Defense Procurement Strategies
Fluctuations in exchange rates have a considerable effect on the expenses associated with defense and intelligence procurement. Ghana’s security sector ought to implement financial instruments such as forward contracts and currency-indexed budgeting to secure fiscal stability. This strategy aids in preserving operational readiness and preventing setbacks during financial disturbances. A procurement plan that spans multiple years and aligns with anticipated foreign exchange trends is crucial for protecting vital investments.
Focusing Economic Interventions on Vulnerable Regions
Regions that are not fully developed, like the Upper East, North East, and Savannah, tend to be more vulnerable to extremist influences. Strategic investments in infrastructure, vocational training, and agricultural development can enhance livelihoods and diminish the risks of radicalization. Initiatives should be community-driven and closely evaluated for their effectiveness and long-term viability. Strengthening economic resilience is essential for combating extremism in these vulnerable areas (African Center for Strategic Studies, 2023).
Establishing Strategic Communications Units
Currency fluctuations frequently lead to misunderstandings and diminish public confidence, particularly when they impact basic necessities such as food and fuel. An inter-agency communications team should be established to articulate economic policies clearly and understandably. Working alongside media and community leaders will help in delivering messages that resonate culturally. Proper communication plays a crucial role in managing expectations, countering misinformation, and enhancing trust in institutions.
Conclusion
Although the recent appreciation of the cedi signifies a significant economic milestone, it does not eradicate the underlying factors that still shape Ghana’s security environment. The instability of exchange rates continues to be a crucial element affecting national resilience, especially in vulnerable border areas and neglected communities.
The relationship between economic performance and security results is not merely indirect; it is direct, complex, and carries political implications. Therefore, a comprehensive national strategy should regard currency management as critical for both economic and security reasons. A robust national strategy must therefore treat currency management as both an economic and a security imperative. By doing so, Ghana can build a foundation for long-term stability, beyond the fluctuations of the foreign exchange market.
References
African Center for Strategic Studies. (2023). Youth Radicalization and Insecurity in West Africa. Retrieved from https://africacenter.org/publication/youth-radicalization-insecurity-west-africa/
Bank of Ghana. (2024). Monetary Policy Report. Accra: BoG. Retrieved from https://www.bog.gov.gh/news/monetary-policy-report-2024/
Bloomberg. (2025). Cedi Appreciates by 26% in Early 2025 as Bank of Ghana Intervenes. Retrieved from https://www.bloomberg.com/africa
Ghana Statistical Service. (2023). Inflation and Economic Indicators. Accra: GSS. Retrieved from https://www.statsghana.gov.gh/publications/
Global Initiative Against Transnational Organized Crime. (2023). Illicit Economies and Armed Groups in the Sahel. Retrieved from https://globalinitiative.net/analysis/illicit-economies-sahel/
Onyshchuk, S. V., Onyshchuk, I. I., Petroye, O., & Chernysh, R. (2020). Financial Stability and its Impact on National Security State: Organizational and Legal Aspects. International Journal of Economics and Business Administration, 8(1), 353–365. Yeboah, S. D., Fumey, M. P., Winful, S. A., Otoo, I. C., & Owusu Junior, P. (2025). Asymmetric Dependence Between Commodity Prices and Selected Macroeconomic Variables in Ghana. Scientific African, 28, e02739. https://doi.org/10.1016/j.sciaf.2025.e02739
