Rail project to reduce cost of doing business - Prof. Bokpin
Head of the Finance Department of the University of Ghana Business School (UGBS), Prof. Godfred Alufar Bokpin, says the proposed construction of a railway line from Accra to Paga will, among others, reduce the cost of doing business in the country.
“Networking the country by rail will come with numerous benefits; for instance, one will not have to live in Accra to work in Accra.
Businesses now have to pay high rent just to be in a prime area, and all of these add to the cost of doing business and those costs are transferred to the end-consumer,” he said.
Prof. Bokpin was speaking at a post-budget seminar organised by the Ghana National Chamber of Commerce (GNCC) in Accra on the theme: “Leveraging on government’s initiatives in the 2017 national budget for private sector growth”.
The rising cost of office space rental in major business districts in the country continues to significantly increase the cost of doing business for medium to large scale businesses, while small businesses are pushed to the brink.
A decent office space in the Kotoka International Airport area for instance, is offered for rent at an average of US$40 per square meter (m2 ), Spintex Road for an average of US$24/m2, Osu-US$20/m2 , and US$20/m2 for office space in Tema area.
This means that, for minimum of 100 square meter (m2 ), businesses in the Airport area will have to pay US$ 4,000 as rent, US$ 2,400 in Spintex, and US$2,000 in Osu and Tema area. The situation is compounded by the number of years rent advance businesses are required to pay.
Though the high rental charged by owners of commercial properties is not captured by the Association of Ghana Industries (AGI) Business Barometer—which expresses the state of business confidence--cost of doing business has increased for large small and medium scale enterprises.
The professor’s argument coincides with several others who have expressed strong optimism about the prospects of the rail sector to open up the economy to facilitate national socio-economic transformation.
Deputy CEO of the Ghana Shippers’ Authority (GSA), Sylvia Asana Dauda Owu, told the B&FT that: “An efficient rail system will open up our corridors for effective transit business; this will attract other countries to do business through our ports and that will create jobs for the people and open up the economy.
It is encouraging that we have a whole ministry to see to the development of the rail network; at the end of the day, if we are able to implement the rail network, it will go a long way to help.”
Similar optimism is shared by the accounting firm, PricewaterhouseCoopers (PwC) in their post 2017 budget analysis.
According to them, the construction and development of an interconnected rail system will facilitate trade across the regions as businesses will be able to operate on a more efficient supply chain process. It will also ease the congestion on roads and improve productivity.
Railway Development Minister, Joe Ghartey, has already indicated that investors are queuing to partner government in the rehabilitation and expansion of the country’s rail network from the south to Paga in the Upper East Region, following a bold attempt by the Akufo-Addo-led administration to transform the sector.
“Due to the government’s pro-business policies, investors have shown interest to partner government,” he hinted when he appeared before the Appointments Committee of Parliament.
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