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Turning the tide: How economically Ghanaian businesses can seize the opportunity for renewal (1)

Prof. Samuel Lartey Opinion Aug - 31 - 2024 , 16:24

The wake of economic turbulence brought on by the COVID-19 pandemic, many Ghanaian businesses, particularly those already struggling with financial instability, have faced unprecedented challenges.

Declining revenues, rising costs, and disrupted supply chains have left numerous companies on the brink.

However, as Ghana’s economy shows signs of recovery and stabilisation, new economic indicators provide a unique opportunity for these ailing businesses to stage a turnaround. This feature article explores how struggling Ghanaian enterprises can leverage these emerging economic trends to rebuild, recover, and thrive in the new economic climate.

Understanding the new economic climate

Ghana’s economic landscape in 2024 is marked by several positive indicators that businesses can harness for recovery:

GDP growth:

Projected to reach 5.2 per cen in 2024, Ghana’s economy is rebounding, offering renewed opportunities for business expansion and consumer spending.

Lower Inflation:

With inflation rates easing to 10.2 per cent by mid-2023, the cost of doing business is gradually stabilising, providing a more predictable environment for financial planning.

Interest Rates:

The reduction of the Bank of Ghana’s policy rate to 13.5 per cent has made borrowing more affordable, opening up access to much-needed capital for struggling businesses.

Stable exchange rates:

The stabilisation of the cedi against major currencies has reduced the volatility that can erode profit margins, particularly for businesses engaged in import and export.

These indicators, coupled with the government’s focus on digital transformation and regional trade, create a fertile ground for businesses to rethink their strategies and make a strong comeback.

Strategies for financial & operational recovery

For businesses looking to capitalise on the improving economic climate, the following strategies can be key to turning their fortunes around:

1. Accessing affordable financing

One of the immediate challenges for financially distressed businesses is securing the capital needed to sustain operations and invest in recovery.

With interest rates at their lowest in years, now is an opportune time to renegotiate existing loans, consolidate debt, or secure new financing at more favorable terms.

Debt restructuring:

Businesses with high levels of debt should explore restructuring options with their creditors. This could involve extending the repayment period, reducing interest rates, or converting short-term debt into long-term obligations.

These steps can help alleviate cash flow pressures and provide breathing room to focus on recovery.

Government and private sector support:

The Ghanaian government has introduced several support programs aimed at helping businesses recover from the pandemic.

These include grants, low-interest loans, and tax reliefs. Businesses should actively seek out these opportunities and apply for any relevant financial assistance.

2. Reassessing and optimising operations

A key step in the recovery process is conducting a thorough assessment of business operations to identify inefficiencies and areas for cost reduction.

Cost management:

Businesses should focus on cutting non-essential expenses and streamlining operations. This might involve renegotiating contracts with suppliers, reducing inventory levels, or automating certain processes to reduce labor costs. Cost management should be an ongoing process, with a focus on sustaining long-term profitability.

Supply chain optimisation:

The pandemic exposed vulnerabilities in global supply chains, and many businesses struggled with delays and increased costs.

Now is the time to re-evaluate supply chain strategies, including diversifying suppliers, sourcing locally where possible, and improving inventory management. A more resilient supply chain can reduce risks and ensure more consistent operations.

3. Embracing digital transformation

The digital economy offers a pathway for businesses to innovate and expand their reach. Digital transformation is not just a buzzword; it’s a critical component of modern business strategy, particularly in a post-pandemic world.

E-commerce and online presence:

Businesses should establish or enhance their online presence to reach a broader customer base. This includes developing user-friendly websites, leveraging social media for marketing, and integrating e-commerce platforms to facilitate online sales.

For retail businesses, offering online shopping options can attract customers who prefer digital transactions.
Adopting digital tools:

Investing in digital tools such as cloud computing, customer relationship management (CRM) systems, and data analytics can improve efficiency, customer service, and decision-making.

For example, CRM systems help businesses better understand customer needs, leading to more targeted marketing and improved customer retention.