The cedi, the price of rice and a divided classroom

Why imported rice rose

• Depreciation means each dollar of imports costs more cedis. A rice importer paying in dollars must raise the cedi price to keep the same margin. Pass-through is usually partial and lagged because importers hold stock bought at the old rate, then re-price when stock turns over.

Why local rice also rose - four transmission channels

1. Imported inputs. Local production uses imported fertiliser, fuel, machinery, spare parts and packaging; when the cedi falls, those costs rise, so the supply of local rice shifts left.
2. Transport and distribution. Fuel is priced with import parity; higher fuel costs raise the cost of moving local rice from farm to market.
3. Substitution in demand. As imported rice becomes expensive, buyers switch toward local rice, shifting its demand right and pushing its price up. This is the channel Kojo's uncle thought impossible.
4. Expectations and wage claims. Once traders expect continuing price rises, they hold stock and set prices defensively; workers and transport unions push for higher charges.

So the local rice price rise is not a contradiction: it is the same shock travelling through input costs, transport and substitution.

Framing 'government versus IMF' Neither uncle has the whole story. Depreciation is driven by several forces at once: a fiscal deficit financed by borrowing, money supply growth, falling cocoa and gold receipts or other terms-of-trade shocks, loss of investor confidence, and speculative demand for dollars. An IMF programme is a policy response - fiscal consolidation, subsidy reform, monetary tightening - which can restore confidence over time but can also raise prices in the short run through subsidy removal and higher interest costs. Attribute each mechanism to its channel rather than to a person or party.

Constant-price caveat: the class should also notice that a 50% depreciation from GH¢8 to GH¢12 does not by itself explain a doubling of price; other factors are doing part of the work.

Immediate response (2–3 minutes)

1. Acknowledge the lived experience without endorsing a side. 'Your father's job loss is real and it is exactly the kind of effect we study. Let us use it as evidence, not as a slogan.'
2. Decline the personal question about voting, calmly and without embarrassment. 'My vote is not part of the syllabus and I will not use this room to campaign for anyone. What I will do is help you evaluate the claims.' This protects both him and any student whose family supports a different party.
3. Set a working rule. 'We test claims against mechanisms and evidence. Arguments about who is to blame are political; arguments about which channel raised which price are economic, and that is our job today.'

Structure for the remaining time

• Turn the three family opinions into a board table: claim / mechanism / evidence that would support it / evidence that would refute it. Students populate the table in pairs. This converts heat into analysis and keeps the lesson on the indicator.
• Handle the WhatsApp video by asking what evidence would test the claim, rather than watching or endorsing it. Remind them that sharing unverified political clips can harm real people and may breach the school's rules on phone use.

Professional standards

• NTS Professional Values and Attitudes require fairness and impartiality; the NTC Code requires teachers not to use their position to promote partisan interests.
• Emotional safety: a student who has just disclosed a parent's redundancy should not be used as the class example of 'the cost of adjustment'. Speak to him privately afterwards and refer him to the school counsellor if he is distressed.
• Balance: deliberately include evidence that cuts both ways (e.g. global fuel prices, drought, external shocks), so no student concludes the class has a party line.

Item 'The country of Zanadu keeps its currency fixed to the US dollar and imports all of its petrol and most of its fertiliser. World oil prices are unchanged, but Zanadu's central bank spends large amounts of foreign reserves defending the fixed rate, and reserves fall sharply. The government also removes a fuel subsidy. (a) Explain two ways in which the loss of reserves could eventually raise the domestic price of food, even though Zanadu's farmers grow their own maize. (4 marks) (b) A trader says: "Food prices rose, so inflation was caused by greedy farmers." Evaluate this statement. (4 marks)'

Marking guide (a) One mark for each correct mechanism, one for the link to food prices.

• Reserves fall → the fixed rate becomes unsustainable → devaluation pressure → imported petrol and fertiliser cost more in domestic currency → transport and input costs rise → food supply costs rise.
• Subsidy removal → fuel price rises → transport and milling costs rise → food prices rise.
• Anticipatory buying/hoarding by traders and households → demand shifts right → prices rise. Accept other sound chains with a clear mechanism.

(b) Level marking.

• Level 1 (1–2): names that farmers are not the cause, or asserts greed, with no mechanism.
• Level 2 (3): identifies cost-push factors as the initiating cause and notes that 'greed' is not a testable explanation of a price change, but does not distinguish motives from market power.
• Level 3 (4): explains that rising costs shift supply left and that traders passing on costs look like greed but are not the cause; notes that genuine market power or hoarding could amplify the rise and that this is testable by comparing margins and stock levels; concludes that the statement confuses a symptom with a cause.

Why this is transfer, not recall: a new country, a fixed exchange rate, a new commodity chain and an unfamiliar claim force the student to select and combine mechanisms rather than reproduce the Ghana example.