]5 OVERVIEW A further issue which would bear more detailed examination is the relationship between renting and income generation. Where the place of residence forms a major potential for business activity -- such as storage, or small scale manufacturing and services, especially in cooked food preparation or laundering, retailing -- any inhibitions on renters in comparison to owners may have important consequences on the economy.3' There are also links into housing design here, where the layout of rooms can help or hinder small scale enterprise by owners and renters.

# A NOTE ON EXCHANGE RATES

Ghana's currency has had what Killick (1978) calls a bewilderingly complex history. Until Independence in 1957, the currency uased in the Gold Coast was the Pound Sterling (£). Until 1965 independent Ghana used the Ghana Pound (6G) with shillings and pence (d) as minor unlts. Their value was at par with Sterling. In July 1965 the currency was decimalized with the Cedi being equal to lOOd (C2.4 per £ Sterling, C1.17 per USS). The minor unit was named the Pesewa (p).

In February 1967 the Cedi was revalued to _EG£_ 50 (10 old shillings), renamed the New Cedi (NC) and exchanged for C1.20 internally. It was valued axternally at US$1.40. In February 1972 the 'New' was dropped, and it again became the Cedi (C).

Since then various changes ln the official race have taken place as follows: In July 1967 to US$0.98: In December 1971 to US$0.55: In February 1972 to US$0.78, or US$l - C1.28; In 1978 to US$1 - C2.75S Since the PNDC government came to power in December 1981, the Cedi has been devalued by stages to US$1 - C90.00 where it stood in April 1986 when the new survey was carried out. In September, 1986 a Second Foreign Exchange Market (SFEM) was Instigated in which the Cedi is auctioned each week. By Aprll 1988 lts SPEM value was C185 per USS.

Exchange rate conversions, always problematic, are even more difficult under such condition. In their revlew of ex:hange rate conventions for their cross country comparisons Malpezzi and Mayo (1985) noted that in many LDCs black market exchange rates are also poor guides to equilibrium exchange rates because of high transactlons costs (including jail), thinness of the market, and the fact that we are trying to compare non-traded goods with exchange rate- !riven by tradeables (the internal relative prlce of tradables and non-tradeables also subject to *.L.ficant distortions). Indeed, Kravis Heston and Sumers (1982) has demonstrated that official (let .-one black market) rates often understate the foreign currency price of non-tradeables relative to purchasing power parity (PPP) rates. That is, PPP rates were typically the highest rates (convertible currency per local currency unit), followed by official rates, followed by black market rates.

In general, Malpezzi and Mayo chose official exchange rates for pragmatic reasonsi official rates were readily available (black market and PPP rates are not so readily available, and different methods of constructing them give quite different results). They included comparisons of Ghana using 1981 data (before the PNDC reforms). Ghana was the one exception in their study, because the official rate of 2.7 cedis to the dollar was so overvalued relative to both black market and all PPP measures, so an equLlibriuc rate estimated by (ref) of 60 cedis to the dollar.

Generally In this report we use local currency amounts and avoid conversion whenever possible. An Lmportant and necessary exception is when we make comparisons to Malpezzi and Mayo's cross country model in Chapter 6. In this report rates of US$1 = C30 are used for 1980 comparLsons: US$1 - C60 for 10811 US$1 - C90 for 1986 comparisons. The recent devaluations have been accompanied by further falls in the black market rate until It stood at about US$1 - C250 ln April, 1986.

i./ See Kahnert (1987).