As Ghanaian businesses pile up costs under frequent power outages over the past four months, the Association of Ghana Industries (AGI) is urging speedy completion of the rather dragged-out Ghana Gas Project to ensure power supply security.
“The AGI considers interdependence of industry and energy as a necessity if the country is to attain upper middle income status in the next three years,” the Association said in its 2012 Business Barometer Report released last week.
Majority of CEOs surveyed in the third quarter indicated that frequent power outages and regular power surges have led to increases in their unit cost of production.
Generally, there has been a marked waning of confidence by the business community of their businesses doing well in the last quarter of 2012.
About 57 percent of the CEOs interviewed in the second quarter had optimistic outlooks for the performance of their businesses during the third quarter, but the figure dropped to 52 percent in the current survey, for their fourth quarter outlook.
Most attributed their pessimism to expected continued depreciation of the cedi against other trading currencies, as well as an increasing burden of taxation.
Incidentally, the two challenges followed poor power supply, in that order, as the three topmost challenges hindering business growth among 10 debilitating challenges, which helped drag down the Business Barometer Index to 19.8, the second lowest ever since the inception of the AGI BBI in 2010.
Measures instituted by the Bank of Ghana may have stalled the meteoric fall of the cedi in recent months, with the local currency indeed registering some marginal gains against the dollar and other currencies in recent weeks, but heavy taxation is an ever present risk to business.
Just the past couple of weeks, a spat between the AGI and the Ghana Ports and Harbours Authority (GPHA) was over the fact that certain directives by the latter; purportedly to ease port congestion was in disguise a tax.
The AGI observed that the GPHA’s directive on “Review of Free Period and Storage Charge on Cargo in the Ports of Ghana” from seven days to four days and about 100 per cent increase in the storage charges was meant to raise revenue under the guise of reducing congestion at the port.
While both the manufacturing and the services sectors registered power, the cedi and taxation as their three most worrying challenges, the agriculture sector was confronted with poor access to credit, high cost of raw material inputs and high cost of credit as the three topmost factors hobbling their business while the construction sector mentioned access to credit, delayed payment, and unfair awards of contract as their top three challenges.
The AGI BBI measures the level of confidence in the business environment and predicts short-term business trend. It simply expresses the state of the business climate in one number, ranging between +100 and –100. It is calculated out of “current” business mood and “expectations” for the future.
The 2012 third quarter recorded a positive indicator of 19.8, which indicates a drop in business expectation over the 2012 second quarter recorded indicator of 26.2. This is an indication that the confidence level of the business community in the business environment has gone down drastically, compared to quarter two of 2012.