Bright Future Awaits Business

Businesses still maintain that cost of credit, inflation and access to credit are the three major challenges they face in the country, the Association of Ghana Industries (AGI) business barometre survey for last quarter has indicated.

Cost of credit hit the agricultural sector hardest with 54.5 per cent of chief executives in that sector citing it as a challenge, followed by the manufacturing sector, which came up with 51.16 per cent.

For the service sector, its major challenge was inflation, cited by 51.3 per cent chief executives in that sector.

Other challenges identified by the business executives are competition from imported goods, the high costs of energy and power fluctuation, high level of taxation, access to credit, cost of raw materials and delayed valued added tax reimbursements.

President of the AGI, Nana Owusu-Afari, who presented the results however, said the three major challenges namely, cost of credit, inflation and access to credit remained unchanged from the last two quarters in order of rank, although each challenge shed some percentage points in quarter four.

Cost of credit declined from 54 per cent in quarter three to 50 per cent in the last quarter, inflation as a challenge declined from 47 per cent to 38.7 per cent with access to credit reducing from 46 per cent to 33 per cent in the last quarter of last year.

Nana Owusu-Afari said in spite of the challenges the CEO were optimistic that the overall business environment would improve in the next six months.

“CEOs of businesses operating in Ghana are optimistic that the overall business environment would improve in the next six months as the fourth quarter Business Barometer (BB) conducted in the last week of December, 2009 suggests,” Nana Owusu-Afari said.

The perception is justified from the context of economic outturn for the last quarter of last year. The modest macroeconomic stability achieved in the third quarter was sustained in the fourth quarter.

The latter quarter witnessed the lowest inflation rate for the year at 15.97 per cent in the month of December, with exchange rate remaining stable.

The Bank of Ghana also reduced its prime rate from 18.5 per cent in September 2009 to 18 per cent in November 2009, although banks did not respond with reductions in their base rates, thus keeping interest rates relatively high above 32 per cent.

As such the 81 per cent of CEOs in the last quarter BB who expected a brighter future, were far more than the four per cent that expected the future to be poor.

Nana Owusu-Afari said the business barometre index (BBI), which measures the level of confidence in the business environment declined from 36.6 in the third quarter to 28.8 in the fourth quarter, which signals that the confidence level in the previous quarter was higher than the current.