IEA outlines constraints hindering growth of private sector

Senior Fellow at the Institute of Economic Affairs, Dr. William Bafu Insaidoo has indicated some key constraints facing the private sector in the country.

According to the study done by the Institute of Economic Affairs (IEA) – Ghana’s first policy think tank, there are some limitations which hinders the growth of the private sector.

The top business constraints identified included high cost of raw materials, high taxes and government charges, high utility charges, high cost of importing raw materials and high exchange rates.

Insaidoo stated that one of the key factors affecting the growth of the private businesses is as a result of inadequate raw materials as industries are made to import from foreign countries at a high cost.

“High cost of raw materials which in a way constraints the activities of the private businesses in the country, there is inadequate materials from local sources and the high cost of importing raw materials basically due to high exchange rates, high transportation cost.”

He also listed among others multiplicity of taxes on businesses as well as high lending rates and the lack of commitment of political leaders.

“The lack of commitment of political leadership to implementation of PSDS II (Private Sector Development Strategic II), we expect that the PSDS II to be implemented in the 2010-2015 but it has been challenged by the absence of the commitment on the part of political leadership as well as inadequate budgetary allocation.”

Speaking at a dialogue on the theme: “A thriving private sector: The key to sustainable socio-economic growth,” Mr Insaidoo noted that for the private sector to thrive, government must provide support for business owners to enable them access long term funds.

He also mentioned that government should lead in formulating conducive environment for venture capital to succeed so as to enable private businesses access long term financing.

“Educate the business community about the fund, how to access the fund… government should lead in formulation and implementation of policy that create a conducive environment for the venture capital finance company to thrive.”

Meanwhile, Fund Manager for BUSAC Fund, Nicolas Jorgensen Gebara stated that in Ghana common vision is lacking among the public and private sector and that Ghana needs a competitive manufacturing industry.

“That common vision I don’t see it, I’ve been here like five and a half years and I don’t see it, the private sector in general must address issues on enabling environment so that companies can compete, produce and grow because this has mutual beneficial effect on government and also private sector.

We need to have a competitive manufacturing industry that can compete with domestic market and also on international market, doing so will generate revenue, taxes and will be a solid economy.”

Dr. Eric Osei-Assibey, a senior fellow at the Institute of Economic Affairs has recommended to government that the private sector needs to be supported to reduce cost of production.