It’s normal for citizens of every country to brag about the value of their country’s currency and standard of living in any conversation on finance. While their statements are most times sentimental and contain little facts, someone has to be telling the truth even if it’s by the slightest margin – no fiat currency stabilizes at 1:1.
Meanwhile, in truth, you don’t need to do a lot to prove which currency is better – simple use of a currency converter app would suffice, and then you can have insights into the standard of living. Although, it’s not always that easy to arrive at an objective judgment because certain monetary policies may increase the value of a currency even if people’s standard of living within the country is low.
Nigerian & Ghanaian Currencies: Which is “Higher”?
The Ghanaian currency is higher than the Nigerian currency in value. Going with the current market value of each country in relative to the dollar (world reserve currency), the Ghanaian Cedi has the upper hand over the Nigerian Naira. 1 Ghanaian Cedi (GH₵) equals 42 Nigerian Naira (₦), and both equal 0.1 US Dollars ($).
Why Ghana’s Currency is higher than Nigeria’s
The simplest answer is linked to the interest rate between countries relative to the dollar. However, there’s a good reason to believe that the redenomination of the “new cedi” ₵ to the Ghanaian Cedi GH₵ in 2007 is the main reason. This is because the action removed four zeros from the new cedi, converting it to the Ghanaian Cedi, i.e. 1 GH₵= ₵.
While that’s the case, Ghana’s inflation rate as of July 2022 was 31.7%, while Nigeria’s inflation rate from reports on July 2022 sits at 19.64%, suggesting that the value of the Ghanaian Cedi may not be greater than the Nigerian Naira after all.
The bottom line is that the Ghanaian Cedi GH₵ is lower in terms of denomination than the naira. However, for actual value, the argument may continue because the value of a currency within a country depends on the minimum wage and the standard of living of its citizens – two fronts where the Nigerian naira dominates the Cedi.
Standard of Living in Nigeria Compared to Ghana
When you look at it plainly without any statistical data, the standard of living for Nigerians is greater than that of Ghanaians. However, this isn’t at all simple, as things can get dynamic when we factor in consumer prices coupled with the minimum wage of each country.
Consumer prices (without rent) in Ghana are 17.39% lower than in Nigeria, and rent prices in Ghana are 55.08% lower than in Nigeria. More so, the local purchasing power in Ghana is 111.34% higher than in Nigeria. The only consumer price category where Nigeria beats Ghana is its restaurant prices – Ghana has a 17.10% higher restaurant price than Nigeria.
Furthermore, when we compare the same metric with the US, we find Ghana’s economy superior in terms of value. While Nigeria has a 99.66% lower purchasing power than the United States, Ghana’s purchasing power is 82.37% lower – an indicator that the standard of living in Ghana is better than in Nigeria.
However, when considering the minimum wage in both countries, it’s hard even to suggest that Ghana has a better standard of living. The minimum wage in Ghana is GH₵13.53 (revised January 2022), while that of Nigeria is ₦30,000. More so, while the daily expense of a Ghanaian costs GH₵288, and Nigerians only need roughly about ₦2000 – the average Ghanaian may fit difficult to cope with living, especially with only one source of income. In contrast, the average Nigerian can live sustainably with the minimum wage.
Ghana vs. Nigeria: Interest Rates
We’ve seen Ghana continuously raise interest rates in recent years in a bid to dial down inflation– the rates have rapidly increased from 15% in November 2021 to 20 in August 2022. However, Nigeria has maintained a steady increment, averaging 11.3% from 20017-2022, while the current rate from August 2022 sits at 14%.
The Ghana Cedi has lost 36.12% year to date (YTD) to the Nigerian Naira, which just about sums up Nigeria’s foreign exchange strength against the Ghanaian Cedi. The Ghanaian Cedi/Nigerian Naira (GHS/NGN) crossed a 5-year low of 56.895 this year, and now, it’s trading at 42.5384 with no bounce in sight.