Unilever MD urges employers to reduce dependency on foreign exchange

Employers have been urged to reduce their dependency on foreign exchange to help stabilise the cedi and prevent it from further depreciation.

Speaking at the 64th Annual General Meeting (AGM) of the Ghana Employers’ Association (GEA), the Managing Director of Unilever Ghana Limited, Chris Wulff-Caesar, explained that this would also mitigate the impact of currency fluctuations on their operations and profitability in the volatile macroeconomic environment.

Specifically, he said the employers could localise their inputs by souring more of their raw materials and inputs locally, rather than relying on imported goods, expanding into new markets, embracing technology to be more efficient and competitive, and exploring alternative funding sources, such as venture capital, crowdfunding and grants, instead of solely relying on traditional bank financing.

“The job to stabilise our own currencies is also up to us. So when we localise, deliberate localisation of inputs to reduce the dependency on foreign 
exchange,” he said. 

Credit

Mr Wulff-Caesar emphasised the need for credit reforms to address the challenges faced by the private sector, especially SMEs, in accessing credit.

He said credit granted to the private sector had dwindled over the past year, from 17.16 per cent of Gross Domestic Product (GDP) in 2012 to a low of 
9.13 per cent in 2023.

In addition to that, he observed that there was an increase in non-performing loans from 19 per cent to 24.1 per cent in the last 12 months, making banks 
more cautious about lending to the private sector.

As a result, he said SMEs, which contributed 80 per cent of the private business sector and employment, faced high levels of defaults due to their limited 
financial management capabilities, especially in volatile economic environments.

AGM

The AGM was on the theme: “Prospects for business confidence and stability in Ghana”. During the year under review, the association made a surplus of GH¢ 64,141 as compared to the 2022 surplus of GH¢ 4,003.

In addition to that, the association’s net assets increased to GH¢ 15,604,120 in 2023 as compared to 2022’s net assets of GH¢ 15,394,979.

New executives, who will steer the affairs of the association for the next two years were also announced.

They are the President, Nana Dr Emmanuel Adu-Sarkodee Afriyie; the Treasurer, Benjamin Appiah-Manuh; the First Vice-President, Micheal Bozumbil, 
and the Second Vice-President, Victoria Hajar.

Nana Afriyie, who highlighted concerning trends in business and consumer confidence, said The Business Confidence Index had fallen from 96 in February to 88.8 in July, while the Consumer Confidence Index dropped from 92 to 81.2 in the same period.

“These figures indicate a growing sense of uncertainty among businesses and consumers, attributed to economic pressures and a challenging business environment,” he said.

He, therefore, urged the government to take decisive action to promote economic stability and job growth.

The President stressed that these trends should not be overlooked in policy formulation, including the creation of a favourable business environment by eliminating inefficient bureaucratic processes, enabling Ghanaian employers to compete effectively, implementing effective instruments to stabilise the Ghana Cedi, reducing inflation, and maintaining it at single-digit levels.

Commitment

A Deputy Minister of Employment and Labour Relations, Dr Festus Awuah Kwofie, said the government was committed to fostering a conducive business environment, including policies to attract investment, streamline bureaucracy, and provide infrastructure.

Specific measures, he said, included redirecting three per cent of GDP to the private sector, introducing a flat tax rate, and establishing an SME bank to support SMEs.