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25.01.2008 Business & Finance

AGI vice president predicts Gloomy year for SMEs

By Nii Kwaku Osabutey ANNY

The Head of the Small and Medium Scale Enterprises (SMEs) unit of the Association of Ghana Industries (AGI) has predicted the collapse of a number of SMEs if government does not take steps to address the disproportionate trade balances resulting from the influx of foreign goods into the country.

Mrs. Leticia Osafo-Addo who is also the Second Vice President of the AGI told the dailyEXPRESS that the influx of European and Chinese goods especially, are gradually crippling the sector.

She expressed regret that promising SMEs have had to fold up because they could not contain the competition from these countries.

“We are not saying there should be no competition but there should be an equal playing field,” the affable Mrs. Osafo-Addo said. “And I wish the policy makers would come out to regulate the operation of the SMEs in the country otherwise the future looks very bleak.”

Though she did not provide statistics as to how many businesses in the SME sector has collapsed, the AGI Veep said many of these enterprises that employ a large chunk of the population, have either collapsed or are on the brink of doing so.

Over the last year, a number of SMEs folded up as a result of the negative impact of the energy crisis, while others were forced to cut down on their employees, while looking out for alternative sources of power to run their businesses.

Operators who were coming up with small but enterprising businesses had no choice but to shut down because they could not cope with the expenses on fuel let alone pay for associated items of the business. Most of them are still believed to be struggling to resuscitate their businesses without any success.

And according to Mrs. Osafo-Addo, the situation has been compounded by the increasing influx of seemingly cheap goods from both Europe and China without much restriction from government.

She told the dailyEXPRESS that government must take a second look at the issue. She noted further that it is difficult for Ghanaian businesses to export their products into either China or Europe purely because of the impediments put in place by their governments to protect their industries from unbridled foreign influx.

“All that we are saying is that our government should also protect us in the same way these countries are protecting their industries from imminent collapse,” she emphasized.

She added that such a step could also mean that most local industries would have the capacity to produce and export to Europe, China and other developed countries.

She was however sad that even within the ECOWAS sub-region, harassment and restrictive measures has been imposed on goods from member countries, making it difficult to allow smooth trade among member states.

The AGI Vice President described as erroneous assertions by most people that industrialized economies do not support their industries.

Touching on credit facilities advanced by most banks to businesses in the Small and Medium scale sector she said recent competition has somehow forced most of them to advance loans to businesses though more could be done. She however said most banks are interested in advancing huge credit facility to those in trade and commerce to the detriment of manufacturing.

“…but it's through manufacturing that we can develop as a country.”

On government's signing of the EPA document, she described it as suicidal and amounting to shooting ourselves in the foot.

“We are opening up our markets to everybody where others are closing down on us.”

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