A survey conducted by the Institute of Economic Affairs (IEA) has revealed that the business environment in Ghana has deteriorated in the last six months.
The development has been attributed to the current power crisis, high cost of credit, poor infrastructure, high inflation and depreciation of the Cedi against major foreign currencies.
It revealed that there was a net loss of employment in the past six months, noting that 41.5 percent of firms in the non-financial sector laid off workers while 12.8 percent of firms did same.
President John Mahama, at the recent May Day celebration, said that smart business were not laying off workers but investing to expand in spite of the current power crisis facing the country.
The President noted that the ‘smart business are instead investing more resources to expand their production in Ghana.’
The views of industry players about the situation and their plans for the future were solicited in the maiden IEA’s Business Confidence Survey.
It focused on 93 firms in the three key industrial regions- Greater Accra, Ashanti and Western.
It covered firms in the three major sectors of the economy which are agriculture, industry and services.
Dr. John Kwakye, a senior fellow at the IEA, who presented the highlights of the report in Accra yesterday, said 53 percent of firms in the non-financial sector indicated that their performance deteriorated over the last six months compared with previous six months.
Recommendations
Dr. Kwakye stressed the need to address the energy crisis immediately to improve the country’s economy.
There is the need to ensure a stable macroeconomic environment to guarantee certainty in investment and business planning, in this regard sound financial management is critical in creating a conducive environment with respect to the cost of credit, exchange rate and lower inflation, he stated.
Dr. Kwakye called for measures to address unemployment, noting that ‘to improve the business environment to help firms to re-engage workers, firm level incentives such as tax rewards for employment generation or expansion would be helpful.’
By Cephas Larbi
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