Weak euro hits small importers

Earlier this year the euro lost about one fifth of its value compared to the US dollar in a matter of months. European efforts to stabilize the common currency stopped the freefall, but the exchange rate is still down about 10 percent compared to this time last year.

Imported products have become more expensive as a result. Particularly hard hit are small vendors with limited financial reserves and no means of securing bank loans.

Rebecca Sarpong Aboagye from Ghana is one such merchant feeling the pinch. Sarpong Aboagye runs a store, Becky Afroshop, in the heart of Cologne. She imports and sells African foods, including cooking bananas, yams, aubergines and dried fish. For months, the weak euro has been making business tough for her.

Import stop

Sarpong Aboagye typically sends euros to business associates in Ghana who purchase and send products back to her in Cologne. "I can't import anymore because if I calculate how I buy the (goods) and sell them, I will lose a lot," she says.

Because of the import stop, a number of products are now missing in the shelves of the African shop. Dried fish, for instance, has vanished. And just a few lonely pieces of yam stand in the corner where cartons of the vegetable were once stacked.

Sarpong Aboagye could import and sell goods at a higher price. But that's not an option, she says, because a price increase would scare away customers. The merchant knows she'll have to make some tough decisions to escape the vicious circle of having to buy expensive products and squeeze a thin profit margin out of them.

"I've given myself two to three months to see whether the situation will change or some miracle will come from somewhere," Sarpong Aboagye says. "If not, I've decided to add a restaurant or quit my business to do something else because it can't go on as it is going."

Immigrants supporting families

In addition to buying African products, customers at Becky Afroshop can transfer money to Ghana, Togo and India. Numerous immigrants support their families at home by transferring euros from Germany.

Such transfers between people in developed markets to friends and relatives in developing and emerging markets has become a big business. Each year, the World Bank records more than $300 billion in international money transfers to developing markets. That's more than all the government development aid to these countries.

For a poor country like Ghana, transfers from expatriates are an important source of money. In 2008, private individuals and non-governmental organizations in the country received more than $9 billion from abroad, according to the Ghanaian Central Bank. A noticeable drop in these transfers would have a huge impact on the weak Ghanaian economy.

Fewer money transfers

Opayen Berimah, an employee at Becky Afroshop, offers a money transfer service, in collaboration with Hamburg-based Universal Money Transfer, which operates a branch office in the shop. Berimah says customers have become increasingly hesitant to transfer money.

"The people are complaining more and more," Berimah says. "They say they're going to wait for the (euro) to go up, and every time it's coming down."

While Ghanaian natives living in Cologne wait for the euro to increase in value, many of their relatives in Africa wonder where the money is. They rely heavily on financial support from relatives abroad -- and follow with worried eyes the volatile euro exchange rate in the currency exchange shops.

Author: Mohammad Awal (jrb)
Editor: Sam Edmonds