Pressure mounts on Akufo-Addo as businesses knock on his doors
Even before he is sworn into office, business associations are already impressing upon the President-elect, Nana Addo Dankwa Akufo-Addo, to create an enabling environment that will help realize the potential of the private sector and equip it to be able to grow and contribute meaningfully to the growth of the economy.
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From core manufacturers to service providers, the businesses, led by their respective umbrella bodies, have sought to remind the President-elect of his pledges to stabilize the macro economy, ease their operational costs and tax burdens and support them with soft credit as promised in the run up to the December 7 polls, which he won – after garnering 53.8 per cent of valid votes cast.
The push for a removal of some taxes, many of which had sunset clauses, is needed to ensure that the private sector is well placed to take advantage of the ongoing drops in Treasury bill rates, stability in the foreign exchange market and the marked improvement in power supply, which had hitherto stifled the progress of businesses.
As a first step, the Private Enterprise Federation (PEF), which is a grouping of 15 business associations in the country, has already secured a meeting with Nana Akufo-Addo on December 21 at which the federation expects the president-elect to outline his main plans for the private sector in the next four years.
But even before that happens, the Chief Executive Officer (CEO) of PEF, Nana Osei Bonsu, said the federation had a few concerns, which it believed required “immediate action” by the incoming administration.
These issues, he said bordered on the removal of some taxes, refund of tax payments and a tactical reduction in public sector borrowing from the short-end of the market.
“We want the one per cent tax on agricultural investment removed because agric is not functioning well. We want the special petroleum taxes removed. We want Value Added Taxes (VAT) on financial services removed.”
“We also want government to shy away from borrowing from the money market and rather stay in the capital market,” Nana Bonsu told the GRAPHIC BUSINESS in December 18.
“One issue we also want addressed is the creation of a special account for VAT refund instead of putting everything into the general account. These are things that we think do not require a lot of time to implement and we hope he does that immediately after he is sworn in,” he said.
Sunset policies
The president of the Association of Ghana Industries (AGI), Mr James Asare-Adjei, said in a separate interview that his outfit expected the president-elect to treat some of the concerns of the private sector on the basis of urgency after he is sworn into office.
“Generally speaking, businesses are looking for a conducive environment to operate in but as a matter of urgency, the incoming administration should look at electricity tariffs.”
As one of the few countries, where industries are seen as subsidising electricity for residential consumers, Mr Asare-Adjei said Nana Akufo-Addo needed to ensure that the reverse occurred in Ghana, similar to what pertained in other economies.
“Then again, the multiplicity of taxes that has bedeviled the business environment need to be looked at again. We think that certain taxes that have sunset clauses such as the 2.5 per cent import levy, the 17.5 per cent petroleum levy and the import duty on raw materials should all be removed as soon as possible,” he added.
Beyond easing the tax burdens of members, the Ghana Union of Traders Association (GUTA), which comprises importers, said once Nana Akufo-Addo took office on January 7, the association would be giving him three months to strictly enforce the law that restrict foreigners from retailing in the country's markets.
Similarly, while the Ghana Real Estate Developers Association (GREDA) has reminded Nana Akufo-Addo of his pledge to remove the value added tax (VAT) on real estate, the Ghana Association of Bankers (GAB) said it was prudent for the Akufo-Addo administration to continue with the phased payment of energy sector debts owed to the banks.
“On the back of the fiscal consolidation, the government (the outgoing administration) has been working with the banks and other lenders to the essential utilities – VRA, ECG and TOR – to takeout all the debt overhang, which was as a result of operational gaps. So, these measures must be continued for the good of the country,” the President of GAB, Mr Alhassan Andani, said.
Implications
Although gentle reminders, the influx of requests by the business associations could serve as early signals of the kind of pressure the private sector and Ghanaians in general intend to mount on the Akufo-Addo administration over the next four years.
After going through two successive fiscal squeezing programmes with the International Monetary Fund (IMF) – between 2009 and 2012; and 2014 and 2017 – the capacity of the private sector to grow and expand has been weakened.
The situation was compounded by the unstable power supply, which started in 2013 and intensified in 2014, then resulting in the shedding off of about two to six per cent of gross domestic product, according to the Institute for Social, Statistical and Economic Research (ISSER) of the University of Ghana (UoG).
But with these challenges now easing and the fiscal consolidation measures yielding results, (inflation, foreign exchange and treasure bills have stabilised), the push for cost reduction measures are needed to help boost the stability of the private sector to be able to reorganise and expand.
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