Ghana’s once blossoming economy has, this year, been junk-rated by almost all of the known internationally acclaimed rating agencies, such as Bloomberg, Moody’s, and S&P.

Thus, the ‘hardness of times’ in Ghana needs no telling. Attempt it and risk sounding like a broken record. There is no gainsaying that all of the macroeconomic indices are looking gloomy. Public debt is projected to outstrip GDP by the close of the year.

The latest (October’s) inflation rate has been 40.4, a 17-straight-month increase and more than two-decade high. The most recent (June’s) unemployment rate stupendously stands at 13.9, three-fold in a decade. As if these are not enough, one economic index that has been hurtling down at a speed, perhaps, never experienced before in the long history of Ghana’s existence is the depreciation of its currency, the cedi.

Albeit the cedi’s downward mobility is an annual ritual, the rate at which the currency has depreciated this year is mind-boggling and its effect, disturbing. For instance, in a short space of four days (from Monday, October 16 to Thursday, October 20) alone, the cedi slumped by a whopping 12%.

Altogether, the cedi has depreciated by some 57% so far this year. Thus, the cedi now exchanges with the dollar at around 12.5 cedis, according to the Bank of Ghana, and is now the worst performing currency on Bloomberg’s ranking of 148 countries. An import-based Ghana’s economy is, the cedi’s daily rapid depreciation has brought untold hardships to the citizenry with no sign of hope. Prices of necessities like and water are increasingly becoming expensive to afford.

Consequently, cedi depreciation has become a great concern for the Ghanaian people and a preoccupation of the government and policy makers as well as a top topic on the media’s radar,

But the debate about the exact cause or causes of the recurring, age-old phenomenon of cedi depreciation is yet to be settled. In 2014, the then-vice-presidential candidate of the New Patriotic Party (NPP) in the 2012 election, Dr Mahamudu Bawumia, now vice-president, intimated that weak fundamentals were responsible for the ‘sorry’ state the State found itself, and lampooned the then-Mahama-led government for supervising what he described as a failure.

‘In an open economy with market determinations of prices, exchange rate movements are the most important indicators of underlying macroeconomic fundamentals. As the saying goes, when in doubt, observe the exchange rate. The lesson from history for governments is that you cannot manage the economy with propaganda. In fact, you can engage in all the propaganda you want, but if the fundamentals are weak, the exchange rate will expose you,’ he said.

By this public assertion, Dr Bawumia implicated weak fundamentals of the economy for the depreciating cedi. However, since he became the vice-president and head of the government’s economic management team, he would parry any attempt by anyone to attribute the cedi’s weakening health to weak fundamentals, as he proclaimed in 2014.

‘Ladies and gentlemen, you will recall that I stated in 2014 that if the fundamentals are weak, the exchange rate will expose you. That was true then, and it is true now. It is one hundred percent correct. So, if the fundamentals are weak, the exchange rate will expose you, but its warped logic to jump from that to a conclusion that if there is depreciation in your country, then the fundamentals must be weak,’ Dr Bawumia argued.

Since this pronouncement, many people, including, of course, members of the National Democratic Congress (NDC), have taken a swipe at him and criticised his ‘inconsistency.’ Critics cannot fathom why the vice-president would continue to make what Dr Tony Aidoo, a former Deputy Minister of Defence and leading member of the NDC, describes as an ‘ideational contradiction’. But is it true the vice-president contradicted himself with his second statement?

While only a cursory look at Dr Bawumia’s two statements may lead (or mislead) one to a conclusion of logical inconsistency, or contradiction, as many have expressed, a careful review will prove otherwise. This piece, thus, analyses and evaluates the validity and soundness of Dr Bawumia’s argument from a purely logical sense and with a clearly apolitical lens, and seeks to educate especially the uninitiated on some forms of valid and sound arguments as well as their fallacies, which are quite tricky and confusing. Let’s first analyse the validity of the arguments.

The validity of the arguments

For the avoidance of doubt, the validity of an (deductive) argument is determined by the form of the argument. That is, a valid argument is a form of deductive argument whose conclusion necessarily follows from its premises when the premises are assumed to be true. In a valid deductive argument in formulaic terms, thus, if A is believed to produce B, then whenever there is A, there is automatically B. In this case, A is the antecedent, and B is the consequent. For example:

Every Ghanaian is an African.

Kofi is a Ghanaian.

Therefore, Kofi is an African.

It is obvious from the foregoing example that the conclusion that Kofi is an African is deduced from the premises that (1) every Ghanaian is an African and (2) Kofi is a Ghanaian. This is an example of a form of deductive argument called modus ponens. It is also called ‘affirming the antecedent’ because for this form of argument to be valid, the arguer ought to affirm the antecedent of the premise for the occurrence of the consequent of the premise. Thus, in the premise ‘every Ghanaian is an African,’ the antecedent is affirmed by the statement ‘Kofi is a Ghanaian.’ thereby creating the occurrence of the consequent, as in the statement ‘Kofi is an African.’ Let’s analyse Dr Bawumia’s argument, then.

Weak economic fundamentals cause currency depreciation.

Ghana’s economic fundamentals are weak.

Therefore, Ghana’s cedi is depreciating.

This is the argument Dr Bawumia made in 2014. Remember, for an argument to be valid, its conclusion should follow from its premises when the premises are only assumed to be true. Thus, if we assume the truth of the premises that (1) weak economic fundamentals cause currency depreciation and (2) that Ghana’s economic fundamentals are weak, then the conclusion that Ghana’s cedi is depreciating can as well be validly deduced.

However, an argument would be invalid if the arguer affirms the consequent and claims the occurrence of the antecedent. That is, the fact that if there is A, there is automatically B does not mean that if there is B then there is necessarily A. Let’s use the sample argument again:

Every Ghanaian is an African.

Kofi is an African.

Therefore, Kofi is a Ghanaian.

This is obviously a bad argument: The fact that if someone is a Ghanaian, then he or she is necessarily an African does not mean that if someone is an African, then he or she is necessarily a Ghanaian. No. The person may be Ghanaian–but may not be. He or she may as well be a Nigerian or Gambian or Burkinabe or a national of any of the other 50 African countries. Let’s now consider Dr Bawumia argument:

Weak economic fundamentals cause currency depreciation.

Ghana’s cedi is depreciating.

Therefore, Ghana’s economic fundamentals are weak.

Using the same principle, this is a bad argument, too, because it affirms the consequent and claims the occurrence of the antecedent, as a result, instead of the other way around. Thus, 

The fact that weak economic fundamentals are an antecedent condition for the occurrence of the cedi depreciation does not mean that the cedi depreciation, too, is necessarily an antecedent condition for the occurrence of weak economic fundamentals. Other factors may be plausible, too. 

But when the consequent does not occur, an arguer can safely claim non-occurrence of the antecedent. Let’s use our example:

Every Ghanaian is an African.

Kofi is not an African

Therefore, Kofi is not a Ghanaian.

It can be seen from the above example that when the consequent does not occur, or is denied (that is ‘Kofi is not an African’), the antecedent does not occur (that is ‘Kofi is not a Ghanaian’), either. This type of deductive argument is called modus tollens (or denying the consequent). In the Bawumia example, we would have something as follows:

Weak economic fundamentals cause currency depreciation.

Ghana’s cedi is not depreciating.

Therefore, Ghana’s economic fundamentals are not weak.

In this form of deductive argument, the modus tollens, the consequent (currency depreciation) is denied so that the antecedent (weak economic fundamentals) can be said to have not occurred.  But in modus ponens, however, the antecedent (weak economic fundamentals) is affirmed for the occurrence of the consequent (currency depreciation). Anything short of these is a fallacy. That is, the argument of affirming the consequent (currency depreciation) for the claim of the existence of the antecedent (weak economic fundamentals) is a fallacy, the fallacy of affirming the consequent, hence a bad argument. This is why I agree with the vice-president when he describes such an argument as ‘warped.’

Yes, by all means both of his 2014 argument that:

Weak economic fundamentals cause currency depreciation.

Ghana’s economic fundamentals are weak.

Therefore, Ghana’s cedi is depreciating.

and his 2022 argument that:

Weak economic fundamentals cause currency depreciation.

Ghana’s cedi is depreciating.

But Ghana’s economic fundamentals are not responsible for- are valid, but are they sound? Let’s evaluate their soundness, too.

The soundness of the argument

While the truth value of a valid (deductive) argument is only assumed, that of a sound argument is actually tested in the real world. Stated differently, the soundness of a deductive argument is determined by the truth of its premises tested in the real world. To this end, a sound argument does not require that the conclusion follow from premises that are only imagined to be true but that the conclusion follow from premises that are actually true in the real world. Let’s analyse the following example:

Every Ghanaian is an African.

Kofi is a Ghanaian.

Therefore, Kofi is an African.

The foregoing sample deductive argument is valid because its conclusion that Kofi is an African follows from its premises (1) that every Ghanaian is an African and (2) that Kofi is a Ghanaian, only if we assume that premises are true. The argument is also sound because even when we go into the real world, we will still find that the premises are, in fact, true. Let’s look at another example:

All living things can fly.

Birds are living things.

Therefore, birds can fly.

The above deductive argument is valid but not sound. It is valid because the conclusion that birds can fly follows from the premises that all living things can fly and that birds are living things if and only if these premises are only assumed to be true. But the argument is not sound because if we go into the real world, we will find that one of the premises, ‘all living things can fly,’ is false. At least one false premise makes a deductive argument unsound even if its conclusion follows from the premises, and is also actually true. Let’s also evaluate the soundness of Dr Bawumia’s two arguments, first in 2014:

Weak economic fundamentals cause currency depreciation.

Ghana’s economic fundamentals are weak.

Therefore, Ghana’s cedi is depreciating.

To be able to ascertain the soundness of this argument, therefore, I should have prior knowledge of the causes of currency depreciation, be able to determine whether weak economic fundamentals are a cause of currency depreciation and are actually present in Ghana, be able to measure the individual contributions of all of the plausible causes, and be able to ascertain the significance level of the contribution of weak fundamentals to the cedi depreciation. Alas, I do not have such competences. In fact, if I attempt to claim any much knowledge in economics, ignorance will expose me!

However, since no one quarrelled with him on this bit of his assertion, and given his authority as an economist and former Governor of the Bank of Ghana, I choose to give his conclusion a high initial plausibility and work with it until a contrary claim arrives with evidence, as critical thinking demands. Now let’s analyse the soundness of his 2022 argument too, in which argument, remember, he conceded that what he ‘said in 2014 [specifically that weak economic fundamentals cause currency depreciation] was true then, and it is true now’.

Weak economic fundamentals cause currency depreciation.

Ghana’s cedi is depreciating.

But Ghana’s economic fundamentals are not weak.

For the same reason of my dearth of knowledge in economics, I am precluded from making conclusive statements about the truth of the premises. However, by applying philosophical knowledge and psychological principles to the argument, any critical thinker should be able to make a sound analysis of the issue at hand.

It could safely be deduced from the argument that other (unnamed) factors than weak economic fundamentals are implicated to be responsible for the depreciation of the cedi. Thus, granted that weak economic fundamentals can cause currency depreciation, is it philosophically possible for other factors, too, to be responsible for the same effect? Yes, it is. In real life, and even in science, there’s hardly only one cause for producing any effect. Based on this strand of proven a posteriori knowledge, thus, one may be confident to say there are other plausible causes for the cedi depreciation.

If there are other plausible causes of the cedi depreciation, the given cause of weak fundamentals ought to be discounted, then. According to Kelly’s (1982) discounting principle, ‘the role of a given cause in producing a given effect is discounted if other plausible causes are present, too.’ (See page 8.) In our case, the given cause is the weak economic fundamentals, and the given effect is the cedi depreciation. Unfortunately, however, neither Dr Bawumia nor his spokespersons have since argued those other plausible causes and their individual ‘significant’ contributions to the cedi depreciation, as well as the ‘insignificance’ of the other given causes.

The reasons they have so far largely given are the COVID-19 and the Russian-Ukrainian War, which two have both been challenged by critics and seemingly rejected by Ghanaians in general. Nonetheless, it is not too late for Dr Bawumia and/or his handlers to come back. The cedi is still depreciating (now at a decreasing rate), and Ghanaians deserve to know the causative agents as well as how to navigate their way and salvage the situation.

The writer is a fact-check/research officer at DUBAWA Ghana, a transnational verification and fact-checking arm of the Centre for Journalism Innovation and Development. You can reach the writer at michael@thecjid.org or 0556489113 or 0248568216.