Business News of Wednesday, 2 August 2017
There is growing optimism among businesses in the country, in response to the raft of measures government is rolling out, including the tax cuts and stimulus package, even though the AGI Business Barometer shows that the high cost of power and credit remain worrisome.
The multiplicity of taxes, which often featured among the top five challenges of businesses in the quarterly survey, dropped to seventh in the 2017, second quarter results, an indication that businesses appreciate the tax cuts by government, said Seth Twum Akwaboah, CEO of AGI.
He said, though, that “it doesn’t mean businesses are so comfortable with the entire tax regime.”
Released yesterday, the barometer, which asks CEOs about their level of confidence in the business environment, shows that confidence rose to 109.3 in the second quarter of the year, from just above the 100 baseline indicator in the first quarter.
Some 73percent of the 461 CEOs surveyed said they expected a better operating environment in the next quarter, even though 61percent of them also mentioned the high cost of electricity as their number one challenge, followed by the high cost of credit (35percent).
The difficulty in accessing credit, depreciation of the cedi/ exchange rate volatility and unfair competition then followed in that order.
The AGI said government’s clipping of aspects of the Energy Sector Levies (ESLA) was not significant enough, reiterating its call for the situation where industry subsidises domestic consumers to be reversed.
The review of the ESLA reduced the National Electrification Scheme Levy from 5 percent to 3 percent; and the Public Lighting Levy from 5 percent to 2 percent.
“At tariff levels of over 19cents kW/h, it is important to re-examine the current utility pricing and tax regime, if government is to chart a competitive part for industry,” AGI President, James Asare-Adjei, read from a press statement.
Cost of borrowing
The association expressed displeasure at the high cost of credit in spite of the consistent drop in Bank of Ghana’s policy rate to 21percent currently.
“Currently, average lending rates are still high and it is obvious that the declining policy rate has not inured to the benefit of borrowers,” the AGI president said.
“Where available, businesses are unable to borrow on account of the high cost. Government must make every effort to ensure that the reduction in policy rate translates into lower interest rates.”