Business owners have shown some marginal confidence in the economy per the latest Barometer report by the Association of Ghana Industries (AGI).
The 2017 first quarter report saw the index remain above the 100 point baseline to record 103.8 points. This is higher than the 101.6 points recorded at the end of 2016.
According to captains of industry, the continuous drop in the inflation rate is positive and more efforts are needed to drive it further down.
Overall Challenges
High cost of utility (electricity/water) emerged once again as the number one challenge, suggesting that a good majority of businesses have still not seen significant improvement in tariff levels.
Consistent with Government’s tax reliefs, multiplicity of taxes lost its prominent position among the top three challenges in previous quarters.
This shift is significant, with cedi depreciation moving up from 4th to 2nd position in Q1. The emergence of cedi depreciation reflects what businesses experienced in Q1.
Majority of the businesses that reported Cost of credit as a major challenge were SMEs. It is worthy of note that Cost of Credit retained third position as a major challenge in the last two quarters.
Until affordable medium to long term financing schemes are made available, Access to Credit and Cost of credit are likely to feature consistently among the bottlenecks that the SMEs face.
These challenges continue to impact business confidence and therefore require immediate measures to create that conducive climate for doing business.
Taxes Recommended for Review
Respondents gave an indication of additional taxes that require a review.
It is not surprising that taxes on utilities top the list. The tax component on utilities is one of the key drivers of the high electricity tariff, according to respondents.
This further strengthens the position of industry that the current electricity tariff levels deserve government’s attention.
24% of businesses, mainly manufacturers will be glad to see Government reconsider “taxes on raw materials” under the supplementary protection measures of the CET.
Interestingly, corporate tax (13%) did not emerge as strongly as expected.
Respondents (5%) say the District & Municipal Authorities levies/fees lacked transparency and ought to be reviewed to prevent contention “Other” taxes as captured include capital gains tax, income tax and property rates.
Employment Expectation
In the next six months 56% of businesses are likely to maintain their current employment levels, whilst 35% indicated that they may hire more people.
However, 9% of businesses indicated that they would reduce the current employment level.
Results of the previous surveys indicate that the business environment does not motivate businesses to employ additional staff except in very critical cases.
