Business News of 2014-05-06

Weak cedi affecting industry

The adverse impact of the depreciation of the Cedi on industry emerged as the top challenge of businesses in the first quarter of 2014.

According to the Business Barometer of the Association of Ghana Industries (AGI), other challenges which featured were rising inflation, multiplicity of taxes and the new directives from the Bank of Ghana (BoG) to halt the decline of the Cedi.

The AGI Barometer is a survey conducted to gauge the state of the business climate, as well as find out challenges facing industries from industry players.

Per the findings of the first Quarter of 2014, challenges facing businesses in 2013 became more prominent in 2014.

For instance, the Cedi depreciation against the US dollar stood at 17.8 per cent by the end of March this year.

Additionally, the 2.5 per cent addition to VAT introduced in January and the surge of inflation to 14.5 per cent in March 2014 all contributed to a high cost of doing business in the country.

Also, the new Bank of Ghana (BoG) rules did not favour most businesses as the survey indicated that 52 per cent of the respondents responded negatively.

Presenting the findings at a press briefing on April 30, the Chief Executive Officer of the AGI, Mr Seth Twum-Akwaboah, said out of the total surveyed, the negative effect of the BoG rules was most felt among the exporters of which 65 per cent of them testified to.

The survey further revealed that 59 per cent of manufacturers were affected by the new BoG forex rules, representing the worst affected sector in the survey.

Mr Seth Twum-Akwaboah also stated that, local manufacturers who import raw materials were severely hit by foreign exchange losses and their margins were affected by the appreciation of input prices; utility prices and rising transportation costs.

He said some businesses had had to absorb some of the newly introduced taxes to maintain their market shares and to remain competitive.

Mr Twum-Akwaboah also disclosed that the Cedi depreciation and the multiplicity of taxes stood out as two major concerns that ran through the feedback from the respondents.

The President of AGI, Mr James Asare-Adjei, stated that the respondents who were selected were people who are at the top of corporate representation.

He said the respondents were Chief Executive Officers and Directors of companies who gave their candid views about how the business environment or the business landscape looked like.

“We are interested in going down to the people who are in real operation, we don’t want to look into the research books and predict or project so we actually go down to those who are doing the business”, he said.

Employment expectation

The report further indicated that the prospects for employment in the next six months were very likely to be affected negatively.

63.5 per cent of the respondents said their employment levels was likely to remain the same for the next six months, meaning they are not going to employ any additional hands within this period.

Unemployment rate is also likely to go up as 15 per cent of the respondents indicated they were likely to decrease their work force within the next six months because of the bad business environment at the moment.

Export situation

There was, however, some good news in the export sector as 48.4 per cent of the exporters said the export trade had improved for the first quarter while 10.5 per cent of exporters said their exports had deteriorated within the same period.

However, only 28.4 per cent of the exporters intend to increase their exports within the next quarter as over 50 per cent said their volumes would remain the same since they were uncertain of the export situation in the next three months.

Over 18 per cent of them also believed their exports would get worse in the next quarter. -news/22384-weak-cedi-affecting-industry.html#sthash.dOdwt2mQ.dpuf

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