From Foes to Friends? - The Zamarama Currency Traders and the Cedi

 Squeeze! Release!       

Ghana’s currency, the Cedi, has become a barometer of wider economic unease. Each spell of depreciation reverberates through households, boardrooms and cabinet meetings alike, underscoring the limits of orthodox stabilisation measures. Monetary tightening, IMF bailouts and foreign-exchange rationing have offered temporary relief but not lasting stability. A deeper truth looms: much of the country’s foreign-currency liquidity is not managed by banks or the central bank, but by an informal network of traders known as the Zamarama.

You Want Dollar?        
These traders are far from peripheral. They dominate the parallel foreign-exchange market, providing liquidity across Accra’s markets and extending their reach deep into West Africa. Their appeal lies in speed, discretion and cross-border connections that often outmatch the formal system. Ghana received $4.6bn in remittances in 2023, according to the World Bank. Yet anecdotal evidence suggests that over a third—roughly $1.5bn—was channelled through informal circuits run by the Zamarama. Their activities, largely outside regulatory oversight, play a decisive role in exchange-rate formation, undermining the Bank of Ghana’s attempts to steady the cedi.

Integrate and Formalise         
In periods of exchange-rate turbulence, conventional remedies rarely suffice. A bold proposal has begun to take shape: to bring the Zamarama into the fold—encouraging these traders to open Currency Trading Accounts (CTAs) with licensed banks, pooling their foreign exchange under prudential supervision. Profits would be shared, with two-thirds accruing to the traders and one-third split between banks and the state. A time-limited amnesty would allow holdings to be regularised before the enforcement of know-your-customer and anti-money laundering rules. Such an arrangement could redirect billions into the formal system, boosting reserves, improving liquidity and generating non-tax revenues.

High Stakes    
The potential scale is significant. Estimates suggest the Zamarama handle between $1bn and $6bn annually. If just a quarter of $3bn in flows were captured, $750m would be lodged with banks. At an 8% return, that would generate $60m annually. Government’s share could be $10–20m—equivalent to GHS 109–218m at current rates. More importantly, greater liquidity could reduce the parallel-market premium, which often widens by 8–12% in periods of shortage, fuelling speculation. An optimistic scenario—50% capture of $6bn—would yield as much as $80m for government coffers and strengthen reserves by $1–1.5bn.

Scenario	FX Handled (USD)	Capture Rate	Formal Pool (USD)	ROI (%)	Annual Profits (USD)	Government Share (USD)
Conservative	1bn	10%	100m	5%	5m	0.8–1.7m
Central case	3bn	25%	750m	8%	60m	10–20m
Optimistic	6bn	50%	3bn	8%	240m	40–80m

 

Visualising the Scenarios:

Learn From Existing Innovations        
International experience shows this is plausible. Nigeria’s Bureau de Change licensing brought billions of informal flows under central bank oversight, albeit with periodic reversals. Morocco boosted reserves by redirecting remittances to banks through competitive rates and less bureaucracy. Kenya’s M-Pesa turned an informal workaround into the backbone of its financial system. Ghana has also seen this logic at work: MTN’s mobile-money system grew by mainstreaming informal cash transactions into a regulated framework.

Cover All Bases             
Yet the obstacles are formidable. The Zamarama’s strength lies in anonymity, flexibility and cross-border reach—advantages formalisation may dilute. Informal trades can yield margins of 15–20%, far above bank returns. Deep distrust of state institutions persists, especially fears of surveillance or retrospective taxation. Without competitive incentives, credible legal guarantees and regional coordination with Nigeria, Côte d’Ivoire and Togo, participation may prove elusive and liquidity may simply reroute offshore.

Start Small      
The government’s best bet is a phased, pragmatic roll-out. A pilot—capped at $50–150m and involving one or two commercial banks, could serve as a controlled experiment. During a six- to twelve-month amnesty, traders would be able to regularise holdings without penalty, before KYC and AML rules are gradually applied. CTAs should be structured to deliver competitive returns, using diversified FX investments overseen by the Bank of Ghana. Digital platforms such as MTN MoMo could be leveraged to reduce costs and preserve the speed and accessibility that make the Zamarama indispensable.

Consider Radical Innovation
Indeed, CTAs could serve as more than a transitional measure. Properly designed, they would function as a controlled experiment in private-sector currency trading. If successful, the model could evolve into a fully fledged system of regulated currency-trading markets, supervised by the Bank of Ghana but operated by private actors. This would not only formalise liquidity but also help Accra position itself as the financial nerve centre of ECOWAS, deepening capital markets and anchoring regional monetary cooperation.

Place All Bets!
At stake is more than monetary stability. For the government, even modest new revenues would offer fiscal breathing space without raising taxes. For the Bank of Ghana, integration would provide oversight of a hidden but critical market. For traders, legitimacy would offer both security and scale. If executed well, the initiative could turn a source of instability into a stabilising force.

Failure, however, would confirm the resilience of informality in West African finance.