Business confidence improves slightly in Ghana

The Association of Ghana Industries (AGI) has revealed that businesses confidence in the Ghanaian economy has improved slightly, for the third quarter of 2014.

AGI Business Barometer study attributed the improvement to the reversal of the recent Bank of Ghana regulations on foreign currency leading to some stability in the cedi.

The business confidence that hit 22.42 in the second quarter survey, has risen up to 42.0 in the current third quarter survey.

Mr Seth Twum-Akwaboah, Chief Executive Officer of the AGI, said a major challenge that continued to be a stumbling block to operations of industries as the inadequate power supply.

Others are the depreciation of the cedi and the exchange rate volatility, access to credit, multiplicity of taxes as well as cost of credit.

Presenting the AGI Business Barometer Indicator (BBI) report for the quarter, Mr Twum-Akwaboah said the top three challenges reflected the economic situation in the past quarter.

The BBI is an AGI proprietary tool that measures the level of confidence in the business environment and predicts short-term business trend. It also expresses the state of the business climate numerically in one figure (index) with 100 as the base index.

Mr Twum-Akwaboah said over 400 industries, majority of which are SMEs from all over the country, formed the sample size of the survey and that and the barometer was calculated out of current business mood and expectations for the future.

He said whereas in the second quarter the cedi depreciation/exchange rate volatility was the topmost challenge, followed by availability of power supply, the current survey however showed power supply as main challenge.

He said a look at the business trend for the past five years when the BBI was introduced, revealed a trend of fluctuations in the business sentiments depending largely on the business situation per the different quarters.

“As a result of daunting economic challenges which were noticeable in the last quarter of 2013, overflowing into 2014, the business sentiments kept dropping,” he said.

“Quarter 2 of 2014 experienced the worst business confidence of 22.42. Quarter 3 of 2014 has however seen a modest rise in business confidence to 42.0 reflecting a return of business confidence in the economy.”

Commenting on the report, Mr James Asare-Adjei, the President of AGI, said the BBI had become one of the most closely-watched business climate surveys in Ghana and that “as business people, we feel obliged to know the state of our business climate to ensure that it is on a sound trajectory”.

He expressed happiness about the fact that government considered AGI recommendation and withdrew the foreign exchange rules in August, which impacted positively on the business environment.

He said as industry, the perennial inadequate power supply was one major issue for which they were anxious to see a permanent solution, adding that AGI was exploring various measures to ensure constant power supply for industries.

“The Private Sector acknowledges the halt in the decline of the value of the cedi…however, government must maintain fiscal discipline to ensure stable economic conditions for the necessary growth and predictability of businesses,” Mr Asare-Adjei said.

Meanwhile, the AGI President also asked government to do a lot more in involving AGI in the IMF bailout discussions and negotiations to ensure maximum benefit for the entire country.

“AGI believes there is the need to partner government in the management of this economy,” Mr Asare-Adjei added.