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14-May-2015  
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THE prevailing hostile business environment is set to threaten Ghana’s competitiveness as far as the ease of doing business is concerned.

Over 80 per cent of business operators in Ghana say their businesses have performed poorly within the first quarter of 2015 and are doubtful if things will improve any time soon.

The captains of industry who are members of the Association of Ghana Industries (AGI) say the prevailing unfriendly business environment has brought untold hardships to them.

According to a survey conducted by AGI, 77 per cent of employers will not employ new staff, they will rather retrench workers.

Dubbed the Business Barometer Indicator (BBI) which measures the current business mood and expectations for the future, the survey revealed a huge drop in general business confidence.

The major challenges captains of industry say they face  in the economy in order of hierarchy were unavailability of power, cedi depreciation and exchange rate volatility, access to credit, delayed payment and unfair competition on the market.

“These challenges have culminated in the high cost of doing business and we further risk losing our competitiveness as a country if they persist,” says AGI President, Mr James Asare Adjei.

Business confidence showed signs of recovery in the last quarter of 2014 only to dip again due to what almost all businesses say are the debilitating power crisis.

“Whenever the index falls below the 100 base index it means that business confidence is weak and we need to be worried. In other jurisdictions, even a one-point drop in confidence is a major issue. So we should not take these issues lightly at all. It means there is something wrong with our business environment,” AGI’s Executive Director, Mr Seth Twum Akwaboah says.

The Association is dreading massive job losses in the next six months if the power crisis in particular is not resolved.

“It means the manufacturing sector is not absorbing workers that much. Mind you, this also includes the services sector. So, clearly, we are not increasing employment,” he said.

“For a growing nation with large numbers of students coming out of our universities, whenever we see job losses as the situation is now, we become alarmed,” Mr Akwaboah laments.

The cedi’s depreciation was second for all sizes of businesses except the micro sector, which named unfair market competition as its number-two challenge.

In an analysis of fuel expenses made by companies, the survey showed that large companies spent close to GH¢25,000,000 from October 2014 to March 2015, while SMEs spent about GH¢6,600,000.

“When it comes to employment, companies are cautious in asking people to go home because it involves losing key staff, paying severance and all. So a lot of companies are actually absorbing some of these costs while others are operating at a loss,” Mr Akwaboah said.

The AGI points out that there is a limit to which industries can absorb these costs, noting that “It gets to a point where we cannot contain these losses anymore, and we will have no choice than to lay-off staff or close down.”

Experts are worried that the results of the survey paint a gloomy picture of Ghana’s business environment and are likely to earn the country a lower ranking on the ease of doing business index.

“Definitely countries which do not have the challenges we have will rank higher than we will and the fact that our energy crisis is taking its toll on the performance of businesses makes it difficult for us to rank  at par with them,” says Economist Dr John Gatsi.

Ghana dropped eleven places in the latest global competitiveness report (2013-2014) issued by the world economic forum.

The report which assesses the competitive landscape of 148 countries, providing insight into the drivers of their productivity and prosperity ranked Ghana 114th out of 148 countries.

Not surprised at the survey results, Dr Gatsi wonders how things could have been different looking at Ghana’s present economic predicament.

The country’s focus, he notes should be whether there are good programmes in place to ensure that the environment is improved and business confidence is restored.

“We should be asking whether there are prospects to improving upon the situation and whether we can sustain those prospects to enhance the business environment,” notes the Economist who is also a Senior Lecturer with the University of Cape Coast (UCC).

Dr Gatsi  is however confident that businesses will begin to smile during the third quarter of the year, by which time the country should be seeing positive signs of the numerous measures put in place to resolve the energy crisis.

President of European Business Organisation (EBO-Ghana), Mr Patrick Martens at the launch of the organization in Accra called on Ghanaian authorities to do away with bureaucracies that are unhelpful to the growth of businesses and trade.

“In an increasingly competitive global market, companies run more and more on information and knowledge. A free market and free trade are the basic medicines to create a healthy economy,” he said.
 
 
Source: The Finder
 
 

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