Businesses still reeling under lack of credit – IMANI
The IMANI Center for Policy and Education has stressed the need for government to create opportunities to enhance the productive sectors of the economy.
According to IMANI, the persistent high cost of credit, rising inflation and the budget deficit still make it difficult for the private sector to expand and engage labour.
A comprehensive business environment report study conducted by IMANI in collaboration with the Business Sector Advocacy Challenge Fund (BUSAC) revealed huge gaps in the microeconomic indicators which hinders growth of the economy.
The report further reveals how businesses are falling apart due to government’s failure to secure the right policies to manage and boost the business sector.
In an interview with Citi Business News, founding President and CEO of IMANI, Franklyn Cudjoe said government must resolve to the right policies and avert a further collapse of businesses.
“Look at all the indicators inflation, the deficit situation, the interest situation. Clearly they are not on. That the productive private center and I add productive private center is engaged in a way that would enhance the delivery that we all need.
The report examined major business challenges between 2011 and the first quarter of 2016.
It also looked at the policies, bills and regulations formulated within the period and how the inconsistencies related to each of the identified constraints.
Access to financing topped as the foremost challenge among the first five issues facing businesses in the survey; followed by inflation, foreign currency regulations, taxation and corruption.
IMANI maintained that cost of credit dominated as a challenge to the businesses because according to World Bank’s WDI data, Ghana’s domestic credit to the private sector (% GDP) increased from 15.1% in 2011 to 20.3% in 2015.
But its pace of expansion has been unstable at best.
Growth of real private sector credit increased from 13.1% in 2013 to 26.6% in 2014 but fell painfully to as low as 3.7% in 2015 (Budget, 2016).
“Businesses complained about the high cost of credit and their inability to access loans due to difficult bank requirements according to AGI,” the report further stated.
Although some interventions such as the Export Trade, Agricultural and Industrial Development Fund had provided credit to some manufacturers, some private sector funding initiatives such as the SME fund intended to provide credit was not implemented because the SME fund was strongly tied to the CDB loan which experienced challenges.