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19.01.2007 General News

2007 Looks Promising

By Daily Graphic
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About three-quarters of private sector business executives are confident that this year will be good for their operations, a survey conducted by the Association of Ghana Industries (AGI) has established.

Out of the 226 chief executives interviewed, only four per cent expected 2007 to be poor for their businesses, while 23 per cent said it would be fair. However, 73 per cent out of the number were very confident that the climate would be good for them.

The AGI Business Climate Survey (BCS), the first of its kind in the country, was to find out, at firsthand, how conducive the business climate is to allow Ghanaian companies to be internationally competitive, serve as a basis for informed decision making by businesses and also inform the policy directions of the government.

The survey, sponsored by the German Technical Co-operation (GTZ), covered AGI members in textiles, garments and knitting, food, drinks and beverages, metals, packaging, printing and stationery, as well as services, in Accra and Tema and the Western, Central, Ashanti and Brong Ahafo regions.

Other areas covered by the survey were drugs and chemicals, electricals and electronics, building products, wood processing and furniture, as well as toiletries and cosmetics.

The survey, however, established that big and especially medium-size companies were much more optimistic than small companies.

According to the figures, for those who said the previous year was good, three per cent were small companies, 24 per cent were medium-sized, with 13 per cent being big companies.

On the export market, almost half of the respondents were already exporting to ECOWAS markets, with only two companies having plans to start exporting to West African markets this year, the survey indicated.

It found that while 32 per cent of the respondents exported to markets other than the ECOWAS region, only one additional company would want to undertake that venture this year.

The survey, which also measured the challenges facing the business sector, also found that the greatest challenge facing the private sector was the recent national load-shedding exercise, followed by the cost of credit, the quality of power supply and competition from imported goods.

It found that three-quarters of the respondents rated the national load-shedding exercise as the most serious challenge, followed by the high cost of credit.

Majority of the respondents also cited the quality of power and competition from imported goods as major challenges.

“The government must institute immediate measures to solve the power crisis in the country. Power is a critical component of industries and there is the need to include extra generation from emergency sources within the next two to three months,” the President of the AGI, Mr Tony Oteng-Gyasi, said about the findings.

On the high cost of and access to credit, the AGI President said there was the need for the central bank to legislate the difference between the Bank of Ghana (BoG) prime rate and the base rate of commercial banks.

“If it is not going to legislate, it should find ways of closing the gap,” he said, adding that getting the banks to publish their charges had also stopped, after just a few months of compliance.

Mr Oteng-Gyasi said interestingly, some banks were lending below their base rates but the public, especially the private sector, needed to be aware of such a possibility.

The AGI President said the fact that only a handful of companies planned to expand their exports was enough grounds for greater support for companies to export.

He called for a level playing field between imported products and locally-made ones based on the report that about 70 per cent cited unfair competition as a threat.

Mr Oteng-Gyasi stressed that imported products were cheaper because their quality was inferior, adding that there was the need for the regulatory bodies, such as the Ghana Standards Board and the Food and Drugs Board, to prevent such sub-standard goods from entering the local market.

He called on policy makers to make use of the findings in their policy formulations and take measures to resolve the bottlenecks found in the business environment.

The next BCS will be conducted in August this year.

Story By Samuel Doe


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