James Asare-Adjei, AGI President
A volatile cedi and the persistent erratic power situation coupled with other ‘unfavourable’ market indicators is fading the confidence of businesses to push further investments into the economy, President of the Association of Ghana Industries (AGI) James Asare Adjei has disclosed.
In a presentation on the second quarter results of the AGI’s Business Barometer, which is a survey on the level of business confidence based on opinions and expectations of business owners, he said the private sector environment is now “too fluidic” for businesses to plan on growth.
The AGI is therefore demanding from government an urgent restoration of macro-economic stability, by cutting expenditure and excessive borrowing, to save the economy from further deterioration.
“All that we are asking for is a stabilised cedi to save businesses from collapse and to boost economic confidence,” he told journalists.
The depreciation of the cedi and exchange rate volatility displaced the energy problem of quarter-one to lead the five major market challenges facing businesses in the second quarter.
The other three core challenges that businesses faced in the second quarter were multiplicity of taxes, access to credit and cost of credit.
The business barometer has a baseline mark of 100 points, where points above the baseline indicates high business confidence while points below the baseline depict low business confidence.
Results from the survey showed a marginal push in business confidence for the second quarter of the year to 87.90 points, compared to the previous 85.0 points for first quarter.
The 2.90 points raise, according to the AGI, was largely due to private sector expectation of the IMF bailout programme and the Eurobond money.
But AGI’s Chief Executive Officer, Seth Twum-Akwaboah, said the boost is too “insignificant” to plan with, and that government must enforce a strong financial discipline at all times -- that is, beyond the IMF programme -- and ensure strict adherence to use of the cedi in transacting business in the country.
“We must always push to cross the 100 points baseline to attract more investments; anything below that means there is more work to be done.
“Managers of the economy must do more to stabilise the cedi by supporting the manufacturing sector with stimulus packages to boost local production, so that the demand for foreign goods will decrease,” he said.
The survey shows businesses are neither absorbing job-seekers nor sure of doing so in the next six months, as about 60 percent of CEOs interviewed were undecided as to whether to hire more or lay-off workers.
This, according to Mr. Akwaboah, is dangerous -- as any progressive economy should see growth in employment creation.
“For a growing nation with large numbers of students coming out of our universities, whenever we see job decreases being more than increases it should be a concern,” he said.
