Power problems still gagging businesses

The latest survey carried out by the Association of Ghana Industries (AGI) on private businesses for the first quarter of this year has pinpointed poor power supply as the leading obstacle restricting the growth and start-up of businesses in Ghana.

Known as the AGI Business Barometer Survey, the report indicated that Ghana’s private sector raised concerns about the continuous power cuts witnessed in the last six months since it disrupts business operations.

“These disruptions lead to shortfall in production and revenue loses to businesses which are unable to procure generators to continue operations. On the other hand, the power cuts lead to increased cost of doing business as companies which can afford, invest in contingency plants/generators and fuel to undertake normal operations.

“Either way, regular power cuts as being experienced in the country limits industry’s international competitiveness.”

Commenting on the overall perception of business performance in the country, the report noted that there was a dip in business confidence in spite of marginal increase in the expectation of the business community.

“For the second time, over the last three quarters, poor power supply is the topmost challenge restricting growth of businesses. This development could be attributed to the intense load shedding exercise embarked upon by the Electricity Company of Ghana in the first quarter of this year.

“The regular twin-challenge of difficulty in accessing credit and high cost of credit, as usual were ranked second and third, respectively, by respondents.”

It also named the largest mover between the fourth quarter of 2012 and first quarter of 2013 as the high cost of raw materials, which dropped from third in the last quarter of 2012 to sixth in the first quarter of 2013.

It is worth noting that high utility prices did not feature in the overall major challenges for the first time since second quarter of 2010 when energy prices were increased by over 90 percent. This confirms the belief that the AGI Business Barometer Survey measures the actual happenings within the real economy of this country, as utility prices have not been increased over a year now.

Again inflation, which did not feature in the overall major challenges in the last quarter of 2012, was ranked eighth in the first quarter of 2013.

This is consistent with the inflationary pressures witnessed in the first quarter of 2013, that is 8.8 percent, 10.0 percent and 10.4 percent in January, February and March respectively in 2013.

For the agricultural sector, access to credit, high cost of raw materials and cost of credit, all maintained their first, second and third positions. The prominence of these challenges call for implementation of policies to address them.

While the depreciation of the cedi, which featured in the top challenges of the agriculture sector in first quarter of 2013 did not appear in that of the last quarter of 2012, lack of market, which was ranked fourth in the last quarter of 2012, did not feature in the first quarter of 2013 at all.

Access to credit, delayed payment and cost of credit were identified as the top three obstacles limiting growth of players.

The operators of the sector, who were interviewed, revealed poor power supply, access to credit and depreciation of the cedi as the key obstacles restricting expansion of manufacturing business in Ghana.

The service sector also ranked poor power supply, depreciation of the cedi and access to credit, first, second and third respectively as major obstacles hampering development of the sector.