The Rentier crisis: Dollarisation, land speculation, and the erosion of the cedi

By Professor Felix Nikoi Hammond

For many years, Ghana’s urban centers have experienced a subtle yet harmful issue: the deep-rooted dollarisation of the property market.

This is not a new occurrence; quoting property prices and rents in US dollars—especially in luxury high-rises in Cantonments and Airport Residential Area, as well as large estates in East Legon—has become a fundamental flaw in the economy.

While property developers often claim that this is a necessary hedge against ongoing inflation, the wider economic impacts are significant and damaging.

This trend, together with the rising land prices in prime areas—where agents now quote staggering figures between US$3.5 million and US$4.5 million per acre in Cantonments and nearby regions—illustrates what economists call Rent Theory. Specifically, it signifies the extraction of “unearned income” that penalises the productive economy and destabilises our national currency.

The Anatomy of “Unearned Income”

Classical rent theory, developed by thinkers like David Ricardo, defines rent as the portion of the product paid to the landowner for the use of the “original and indestructible powers of the soil.”

Importantly, this income is often “unearned.” A landowner in East Legon or Cantonments does not generate the value of their land through labour or innovation; instead, the value of the land rises due to external factors such as state-provided infrastructure, the concentration of businesses in the city, or overall population growth.

When land prices in prime Accra neighbourhoods increase by hundreds of percentage points, landowners essentially extract wealth from society without creating any new productive capacity. This “rentier” behaviour shifts capital away from manufacturing, agriculture, and technology—sectors that promote development—into a speculative bubble that benefits a small elite while displacing the middle class and productive businesses.

Capital Cannibalisation: Dirt vs. Development

One of the main concerns with these $4.5 million-per-acre prices is the risk of ‘cannibalization’ of investment funds. If investors allocate most of their budget to land purchases, they may have limited resources remaining for construction, technology, or operations.

In a healthy economy, capital is invested in productive assets such as machinery, architectural finishes, research, and human resources. But in Ghana’s distorted market, land has become a drain on capital. When 70% to 80% of total project funds are allocated to land acquisition before construction begins, the effective investment is reduced.

Developers may cut back on construction quality or be tempted to build “ultra-luxury” projects that often remain empty because land costs prohibit affordable or industrial developments. This situation risks sacrificing our industrial growth to overpriced high-rises that contribute little to GDP.

The Myth of Monetary Sovereignty

Recently, the government has taken commendable steps to strengthen the Ghanaian cedi, with the exchange rate currently hovering around GHC 11 per dollar—a significant recovery from its previous low of GHC 17. However, we must confront a harsh reality: the cedi’s true equilibrium price cannot be determined until the economy is fully de-dollarized.

We need only look at the UK pound to understand monetary sovereignty. The pound is strong because it is impossible to spend any other currency within the UK economy. There is no “parallel” pricing in London; the pound is the alpha and omega of every transaction.

In contrast, Ghana struggles with a dual-currency system that has lasted despite years of rhetoric. Beyond luxury real estate, even high-end vehicles and specialised services are openly traded in dollars.

The regulator seems unable, or perhaps unwilling, to enforce the law beyond issuing mere warnings and directives that have, historically, lacked the power of prosecution. So far, we have seen no high-profile prosecutions for breaches of these legal tender laws. This long-standing lack of enforcement means the property market effectively operates as a dollar zone, constantly exerting artificial pressure on our national currency.

The Economic Implication: A Burden on Productivity

The implications for the broader economy are worrying. When office and warehouse rents are linked to the dollar, the cost of doing business in Ghana becomes excessively high. This weakens the competitiveness of local companies and deters foreign direct investment in productive sectors. Furthermore, the property market is increasingly serving as a vehicle for wealth concentration rather than wealth creation.

Those who already own land receives significant “unearned” windfalls, while those who do the actual work—the entrepreneurs and professionals—see their disposable income consumed by exorbitant rents. Finally, persistent pressure on the cedi from real estate transactions leads to higher imported inflation. We cannot claim a truly “stable” cedi when the nation’s most valuable assets are tied to a foreign benchmark.

A Call for Policy Correction

To stabilise the cedi and steer our economy towards growth, we must tackle the ‘rentier’ issue through strong policy measures. The government should do more than issue directives; it should start prosecuting those who break legal tender laws. Pricing in dollars should not be a simple ‘choice’ or ‘negotiation’; it should be a criminal offence with clear penalties. Additionally, we should consider taxing increases in land value attributable to unearned gains.

For instance, when infrastructure such as roads increases land prices in an area, a portion of the profit should be reinvested in affordable housing and infrastructure development. Ultimately, it is more beneficial to establish a factory or farm than to leave land in Accra unused, waiting for its dollar value to increase.

The current property market reflects an economy driven more by speculation than by productive activity. Without regulations on dollarisation and speculative land prices, especially in key zones, the cedi will continue to be dominated by rentiers.

It is time to reset and regain control of our currency, ensuring land benefits the many, not just the privileged few.

The writer is the Chair of Governing Council, Southshore University College.

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