Local businesses experience reliefs
Local businesses experienced some reliefs and signs of recovery in the first quarter of this year, the Association of Ghana Industries Business Barometer Indicator (BBI) has shown.
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According to the BBI, the confidence level of businesses improved from 95.9 in the last quarter of 2015 to 101.9 points in the first quarter of 2016.
The BBI was presented by the Executive Director of AGI, Mr Seth Twum Akwaboah, at a press conference in Accra on Tuesday.
He said the renewed confidence in the business sector was a positive sign to begin a new year, “considering the fact that the same period in 2015 recorded a drop”.
The survey had a sample size of 507 made up of 42 per cent from the manufacturing sector, 44 per cent from the service sector and 14 per cent from the construction sector.
Mr Akwaboah mentioned the top five challenges identified by the survey to be ‘high cost of utility tariffs’, ‘multiplicity of taxes’, ‘cedi depreciation’, ‘access to credit’ and ‘delayed payments’.
What is BBI
The BBI is an international tool used by the AGI to measure the level of confidence in the business environment and predicts short-term business trend.
It is based on the AGI’s assessment of current economic conditions and perceptions and expresses the state of the business climate numerically.
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The indicator is calculated based on current business mood and expectations for the future.
Presenting the report, Mr Akwaboah said although businesses were optimistic of the next quarter, the rise in confidence index might not be sustained if the challenges experienced in the first quarter of 2016 persisted.
The BBI showed that the December 2015 increments in utility tariffs had negatively impacted a high proportion of business with seven out of 10 businesses reporting high utility prices as their major bottleneck.
Also, even though multiplicity of taxes and high cost of utility cut across all sectors, the manufacturing and service sectors were the hardest hit together with other challenges, local manufacturers, especially, had been heavily affected.
AGI commends government
The President of the AGI, Mr James Asare-Adjei, commended the government for the seeming stability in the economy and noted that efforts in solving the aforementioned challenges had contributed to the recovery of the economy.
However, he said the key concern that was weakening business confidence was the high cost of utility tariffs that was rendering local businesses uncompetitive.
He said the current system where industries were subsidising residential consumers was eroding competitiveness.
Mr Asare-Adjei, therefore, called on the Public Utility Regulatory Commission (PURC) to re-classify consumer categories in the electricity sector.
He said access to medium-to-long-term credit continued to remain a bottleneck to businesses as they were unable to borrow due to the high cost of credit.
On the issue of multiplicity of taxes by the government, Mr Asare-Adjei called on the government to plug revenue leakages while broadening the tax net as a means of formalising the large informal sector of the economy.
He further called on the government to ensure that it kept its expenditure budgets within limits to avoid over runs which, he said, were typical of election years.
The current budget deficit of 7.1 per cent must be further reduced, he added.
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Writer's email-rebecca.quaicoe-duho@graphic.com.gh