Seth Adjei Baah, outgoing president of GNCC
In 2011, when the Ghanaian economy recorded a GDP of 14.4 percent, excited members of the Ghana National Chamber of Commerce (GNCC) thought it was going to be the springboard for the economy’s acceleration from a lower middle income level to the higher middle income bracket.
However, the Ghanaian economy’s real GDP growth rate, which was 7.3 percent in 2013, plunged to 4.0 percent in 2014.
The manufacturing sub-sector has consistently recorded negative growth over the past three years.
Seth Adjei Baah, outgoing president of the chamber, who disclosed this at its Annual General Meeting (AGM) yesterday in Accra, said that “the Ghanaian economy has been characterized by power outages, fast depreciating currency, high cost of borrowing, high rate of inflation and unbridled competition from imports.”
“It is common knowledge that the private sector in Ghana has endured difficult moments over the past years. I say with a heavy heart that the business environment in Ghana keeps deteriorating on a daily basis and business confidence is fast waning,” he stated, adding that “the macroeconomic and infrastructural constraints have almost rendered the private sector in Ghana unprofitable, uncompetitive and unable to grow to create the much-needed jobs.”
On the local currency, he said it has in recent times performed abysmally against the major international trading currencies like the dollar, euro and pound sterling, such that the private sector has had to grapple with the rapid depreciation of the cedi for several months until it began to show signs of stabilization in 2014.
“This was however short-lived as the cedi weakened again in the first half of 2015.
“The high volatility in the foreign exchange market made it extremely difficult for businesses to plan. Clearly, the inability of the cedi to withstand the major trading currencies is due to our excessive imports against exports. This structural problem which must be addressed immediately requires the collaborative effort of government and the private sector. To achieve this will require that we patronize goods and services produced in Ghana.”
He said the Ghana National Chamber of Commerce and for that matter the private sector has not been impressed with the way in which the energy crisis has been handled.
“This crisis has lingered on for far too long and its debilitating effects are there for all of us to see. Sadly, the energy crisis has resulted in businesses cutting down production, folding up or laying off workers, further worsening the already precarious unemployment situation in Ghana. Businesses which have survived this hardship had to look for alternative sources of energy at exorbitant prices which largely rendered most of them uncompetitive and unprofitable.
“Experiences gathered so far indicate that member firms are not able to meet huge orders from buyers abroad as a result of the afore-stated challenges.”
He urged government to support industry so as to give meaning to the country’s National Export Strategy of increasing non-traditional exports, with annual growth targets reaching $5 billion in the next five years.
High cost of borrowing
Mr. Adjei Baah added that the Chamber has consistently decried the high cost of borrowing in the country, stressing that Ghana is among countries with high interest rates in the world.
“One wonders how businesses can compete at this level of interest rate. This challenge is well captured by international surveys such as the World Bank’s Doing Business and the Enterprise Survey on business environment constraints. Lending rates in Ghana range from 27 to 35 percent with commercial banks and between 60 to 100 percent with microfinance institutions.”
In this election year, he said, businesses would face the brunt of overspending, as government would have to borrow from the domestic market in subsequent years.
Such a situation, he added, crowds out the private sector.
“We urge government to restrain itself in its expenditure this year.”
By Samuel Boadi