Energy crisis crippling business — IEA
The Institute of Economic Affairs (IEA) has called on the government to address the energy crisis as a matter of urgency, since the situation is crippling businesses.
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A Senior Research Fellow of the IEA, Dr John Kwakye, made the call on behalf of the institute when he presented the report of a survey conducted by the institute on the performance of businesses in Accra Tuesday.
Business Confidence Survey
The research, dubbed: “Business Confidence Survey (BCS)”, was introduced late last year by the IEA in recognition of the private sector as the key driver of the economy.
The BCS is to be conducted bi-annually and will seek the concerns and expectations of the business community.
The maiden BCS covered 93 firms in the three key industrial areas of the Greater Accra, Ashanti and Western regions.
It also covered firms in agriculture, industry and services which are three major sectors of the economy.
The number of companies selected from each sector was based on the sector’s contribution to the Gross Domestic Product (GDP).
Data was collected on business performance, business environment, business expectations, as well as prospects.
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Energy crisis affecting private sector
Dr Kwakye said business respondents identified the energy crisis as the most important problem facing the private sector.
He said the research revealed that the business environment had deteriorated in the last six months due to the shortage of energy, the high cost of credit, poor infrastructure, as well as the adverse macroeconomic environment, including high inflation and currency instability.
He stressed the need to ensure a stable macroeconomic environment to guarantee certainty in investment and business planning.
He suggested that sound public financial management was critical in creating a more conducive environment with respect to the cost of credit, the exchange rate and inflation.
Net Loss in Employment
He said the research also indicated that there had been a net loss of employment in the past six months.
Dr Kwakye said the net loss was to be expected, given the myriad of constraints facing businesses, including, in particular, the energy crisis, which had precipitated layoffs.
He stressed the need for a serious intervention to address the unemployment issue at the firm level, while improving the business environment to help companies re-engage workers.
He said, however, that businesses were optimistic about their performance in the following six months, explaining that, that optimism seemed to emanate from the fact that at the time of the interview, the country had emerged from a major economic crisis, particularly relating to the cedi, and there appeared to be prospects of the energy crisis improving due to assurances.
Dr Kwakye said financial sector firms seemed to have performed better in the preceding six months than non-financial sector firms.
He explained that, that dichotomy appeared to emanate from the fact that those two sectors had different sets of constraints.