'Save our businesses in 2016'

In spite of widely held views of a more difficult 2016, businesses in the country are expecting considerable support from government, beyond restoring macro-economic stability.

Business Associations in the country say government must restore confidence of the business community which has waned considerably due to the hostile business environment.

This year, they expect government to among other measures deal decisively with the energy crisis, the depreciation of the local currency, refrain from the imposition of more taxes and protect local infant industries from unfair competition.

A cursory assessment of the manufacturing sector in 2015 revealed that manufacturers had to cut production by close to 50 percent due to the protracted energy crisis.

Economists have remained worried and skeptical over the achievement of growth targets for this year.

This is due to persistent deterioration in Ghana’s macroeconomic environment, coupled with unfavourable external market conditions this year as well as expected unbridled costs associated with this year’s elections.

The Private Enterprises Federation (PEF) which has membership from all private businesses and trade associations from both the formal and informal sectors of the economy is asking government to stop paying lip services and provide concrete support for businesses.

“I haven’t seen any initiative that gives me confidence that the private sector will be better off this year,” says PEF President, Nana Osei Bonsu.

According to him, the first and foremost challenge is power, adding “we must find a lasting solution to the power crisis as we wait to see the volumes the power barges will add to the generation.”

He challenged government to unveil practical and workable initiatives that will propel industry to the desired heights.

It will be recalled that the 2014 budget statement announced the creation of an Export–Import Bank (EximBank) meant to help address the challenge of long-term credit for Ghanaian exporters. The bank has at yet to be set up.

Nana Osei Bonsu insists that “merely merging funds to form Exim Bank is not enough. It must be provided with adequate resources so that businesses can access capital for technical skills development and other pertinent issues such as post-harvest losses.”

Under EDAIF, businesses often complained about their inability to access funds to expand while the fund itself often maintained it was doing its best within its means.

On job creation, industry players are demanding programmes and initiatives that will encourage the private sector to thrive and to create jobs.

“Since government itself has placed a moratorium on recruitments, it means fresh graduates from the country’s universities and colleges must be absorbed by the private sector; but where is the support? Where are the programmes and initiatives?” they contend.

The Association of Ghana Industries (AGI) which is unhappy over the failure of the 2016 budget to address challenges hampering the growth of local industries has renewed its call on government to set up a stimulus fund to support export-oriented companies.

Executive Director of the AGI, Mr Seth Twum Akwaboah maintains that government must provide tax reliefs and subsidise power for indigenous small scale enterprises to afford them the ability to grow.

“The situation where all businesses, both large, medium and small scale are together fighting to survive the turbulence is not appropriate at all; its killing start-up companies,” he noted.

Country manager for KLM, Mr Axel Metselaar laments the unduly high taxes on aviation fuel in Ghana and calls for a major decision to reduce them this year.

“For us, one tax that is actually impacting on our operations is the fuel tax; it is to such an extent that we are taking fuel from Amsterdam, flying it over to Accra to be used for the return flight; this in our perspective is ridiculous” he observed.

He noted that “Something needs to be done, lower the taxes, and you will get more volumes; I think it will be a wise decision to reduce taxes in 2016.”

With 28 percent increase in fuel prices last week, (one of the highest in a decade,) it appears businesses would have to brace themselves for a more hostile operating environment.

“The year will offer an abundance of challenges” observes Economic Counselor and Director of Research with the International Monetary Fund (IMF), Mr Maury Obstfeld.

Mr Obstfeld cautions that emerging markets and developing countries will have to brace themselves for further deterioration in commodity volatilities as the global economy remains fragile.