High power tariffs, taxes major setbacks for businesses — Barometer report
High cost of electricity and multiplicity of taxes have been the two major setbacks to a robust business environment in the country, the fourth quarter Business Barometer report conducted by the Association of Ghana Industries (AGI), has revealed.
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The report noted that the two indicators had negatively affected the performance of businesses in the manufacturing, service, and construction sectors and stifled job creation potential in those areas.
According to the report, the depreciation of the cedi was also a major challenge to the growth of businesses in the manufacturing sector, while delayed payments and high cost of credit deprived the construction sector of the energy it needed to blossom.
Business confidence
The report, which was presented in Accra yesterday, however, revealed that business confidence among business operators shot up marginally from 99 points below the baseline of 100 in the third quarter of 2016, to 101.6 in the fourth quarter.
The Chief Executive Officer of AGI, Mr James Asare Adjei, who presented details of the report, observed that the marginal increase in business confidence was driven by higher level of expectation by operators in the business community.
“The marginal increase in business confidence within the period indicated that employers were likely to hire 10 per cent more than they would have done in the last six months preceding the report,” he added.
The figures
Details of the report showed that even though high cost of electricity topped the league table of challenges that confronted businesses, the topmost priority of 36 per cent of the business community was for the current government to reduce taxes, while 30 per cent others wanted a reduction in electricity tariffs.
The report further showed that the high cost of credit was the priority of 12 per cent of the operators of businesses, with 10 per cent also focusing on job creation.
Recommendation
In its recommendations, the AGI called on the government to make good its campaign promise of removing nuisance taxes in order to create a conducive environment for businesses to thrive.
“When businesses pay high taxes and high electricity tariffs, it affects job creation and tends to reduce job security,” Mr Adjei added.
Responding to questions from journalists, the Vice-President of the AGI in charge of Large-Scale, Dr Adu Gyamfi, said the AGI was ready to work with the government to address challenges in the business sector.
He said initiatives such as the one “district, one factory,” “one village, one dam” and other initiatives by the government were fertile grounds for local industries and the private sector to thrive.
“Therefore, as an association, we will partner the government and make the necessary inputs that will inject fresh energy to fuel the growth of businesses,” he added.
Communique
In a related development, a communiqué by the National Council of AGI has called on the government to take steps to ensure efficiency in power generation, transmission and distribution as a measure to reduce the high cost of electricity tariffs.
The AGI also called on the government to ensure that taxes that stifled the growth of businesses were reviewed in the budget for the second quarter of 2017.
The AGI council further emphasised the need for local businesses to be empowered through government procurement and local content arrangements in strategic areas of the economy.
While lauding the government’s initiative to create the Ministry of Business Development on the grounds that it would facilitate the growth of local businesses, the AGI Council urged all members of the association and the business community to strategically position their businesses to reap the benefits of the new ministry.