Businesses look for better years ahead

BY: Enoch Darfah Frimpong

The business community is expecting a much better business climate and economic activity next year.

The community also expects that instability in the exchange rate which had fuelled marginal inflation would correct to impact on the policy rate of the Bank of Ghana and subsequently on the base rate of commercial banks.

The Deputy Managing Director of Fidelity Bank, Mr Jim Baiden, told the GRAPHIC BUSINESS in a telephone conversation that the banking industry was hoping to see a more stable economy with the elections now over.

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“We expect that post-election period will be more stable. We also expect interest rates to fall and make the cost of borrowing lower and also impact positively on inflation,” Mr Baiden said, explaining that the year had been very challenging for commercial banks, particularly with the tightening administrative measures announced by the Bank of Ghana (BoG).

He said the banking industry had seen difficult times in 2012 following the contractionary stance the Bank of Ghana took to check excess liquidity. He said the exchange rate restrictions had affected liquidity in the banking industry and could slow down the growth in deposits, especially as the BoG treasury rates competed with the banks’ rates.

Government in its 2012 Budget Statement  hoped to achieve  a real non-oil Gross Domestic Product  (GDP) of 7.6 per cent, real overall GDP growth of 9.4 per cent, average inflation of 8.7 per cent, end-period inflation of 8.5 per cent and gross international reserves of not less than three months of import cover for goods and services and an overall budget deficit equivalent of 4.8 per cent of GDP.

Mr Baiden’s projects follow trends established by various factors and think tanks which have predicted a favourable 2013.

Foremost, the BoG increased the policy rate from 12.5 per cent in January to 13.5 per cent in February and to 14.5 per cent in April this year. The current 15 per cent policy rate took effect in June this year.

In addition to its open market operations characterised by more treasury bill issues, the central bank has also taken some administrative measures to tighten the monetary system. This includes banks keeping mandatory reserves over cedi and foreign currency deposits in cedis and instructing all banks to provide 100 per cent cedi cover for their off-shore account balances to be maintained at the BoG.

With oil production expected to peak at 120,000 barrels bopd, the Centre for Policy Analysis (CEPA), has projected that growth would rebound to 10.5 per cent in 2013 before falling back to 9.0 per cent the following year.

CEPA projected in its 2012 Ghana Economic Review and Outlook that the non-oil sector would also grow at an average growth rate of 8.5 per cent between 2011 and 2014.

The cedi and foreign exchange inflation is expected to be contained because unlike former times when the government dolls out funds to retire maturing bonds and treasury bills, this time it has adopted a new policy where it issues medium-term bonds to pay maturing ones.

This will reprieve the system of so much cash which often leads to inflation.

On the political agitations of some New Patriotic Party (NPP) members for their candidate Nana Akuffo Addo to rather be declared the winner of the December 7 polls, the business community said they were not worried over the current magnitude.

“From where we sit, the agitations are not widespread and there should be no cause for alarm. It is business as usual for us,” the deputy managing director of Fidelity Bank told the GRAPHIC BUSINESS.

The Export Manager of Mohinani Group, Mr Martin Ahovi, also told the GRAPHIC BUSINES that the aftermath of the elections had not in any way affected their business. 

"Everythin is cool. Business is the same as before or throughout the year. We are not affected by anything. I will even say that business is booming because it is Christmas period," he said.

 He said the company's participation in the made-in Ghana solo exhibition in Liberia had already started yielding fruits as the company had just exported a 40 footer container load of goods to that country.

The Mohinani Group, which deals mainly in polythene, polypropylene films, shopping bags, poly tanks among others, is also projecting a better economy and business climate next year.

“The company is looking forward to improve on its exports next year,” Mr Ahovi stated.

In sharp contrast, traders in the Central Business District of Accra, Kaneshie and the Kwame Nkrumah Circle area are expressing grave concerns about the events after the 2012 general elections which saw the ruling National Democratic Congress retaining power for another four-year term.

According to them, violent attacks in the markets by armed thugs is making the markets unsafe, hence the reduction in the number of people who buy from market, particularly around this time of the year when Christians are about shopping for the Yuletide next week.

Consequently, they have called on the government to push change the election date from December to about October so that it does not affect the business in the markets while reducing tensions prior to the celebration of the Yuletide.

Following the declaration of the election results by the Electoral Commission (EC), the opposition New Patriotic Party (NPP) supporters have gathered at the Obra Spot at the Kwame Nkrumah Circle in protest against what they described as rigging of the elections in favour of the sitting President.

According to the traders there, the number of people who normally buy some of the wares are no longer doing so because they fear standing too long for fear of what might happen next.

One trader who sells kids clothing in a corner near the Tip Toe Lane, Adjoa Konadu Abrefi, said “we as traders ourselves are scared because after every hour or so, we hear shouts of ‘they are coming, they are coming’ and then people scatter all over the place”.

That, she said, was negatively affecting them because for fear of being attacked people do not patronise their products.

“This is our season and the issues surrounding the election are  not helping us at all; We therefore call on the security to restore calm while the leaders of the parties also call their supporters to order”, she said.

Madam Hannah Morrison alias, Area Mama, at the Makola market, where there are reports of armed thugs supposedly from the NPP terrorising people in the market for supporting the NDC, described sales after the elections as “slow and worrying.”

“We have invested so much in buying our wares but the people are not coming the way we expect it, particularly at this time of the year when all shopping is about Christmas”, she said.

Madam Morrison attributed the reason for the slow sales to the pockets of violence around the market and called for maximum security and reassurance from the political parties and the security agencies that the country is safe.

“Personally, I want the election date to be moved way ahead of the Yuletide so that by the time the festivities are due, we will have peace of mind to do our business and everyone will move around without fear,” she said.

Naa Amerley Torto also a trader who sells greeting cards at Makola said “it seems people have forgotten there is Christmas in the corner and therefore, they seem engulfed in the elections and the aftermath”.

She wondered why elections should be fixed around a festivity such as Christmas because it affected sales, particularly for the Yuletide is concerned.

Meanwhile, the two political parties have committed themselves to ensure peace and have also prevailed on their supporters to be calm.

Story by Samuel Doe Ablordeppey & Ama Amankwah Baafi