Traders Panic, AGI urges government to sit up

On-the-ground interaction with leaders in business and traders in the informal sector by The Statesman reveals a considerable slide not only in terms of business activity but also investment returns.

Hardest hit are importers, who have to buy dollars to travel to places like China for goods. Their profit margins have been depleted by the falling cedi, consumers are also running away from the imported wares when prices are increased to offset foreign exchange losses. A survey conducted by The Statesman at the Agbogbloshie food market in Accra shows that foodstuff traders, who form a huge chunk of the informal business sector of the economy, are seeing a significantly higher percentage of their goods perishing for lack of custom as consumers cut spending.

Checks at the Association of Ghana Industries also reveal a discouraging situation regarding returns on investments made by players in the private sector and the future of industry, with captains of industry cautioning that, unless a vigorous effort is made in reordering the environment in terms of policy and action, the level of economic growth needed by the nation to catapult it into the middle income bracket would de difficult to achieve.

In short, businesses are waiting for President JEA Mills' version of a 'stimulant package' for the Ghanaian economy.

In an interaction with The Statesman, Kojo Olabode-Williams, the Public Relations Officer of the Association of Ghana Industries, said the AGI, for instance, is not happy about the prime rate regulation of the economy on the part of Government, the Central Bank and the Ministry of Finance. Average lending rates, which stood at 27% in December 2009, is currently at 34% and rising.

He lamented that for the first quarter of the year, conditions on the Ghanaian market have not been favourable to the private sector, including the informal sector and the Small and Medium Enterprises in the country.

He observed that due to the weakening of the cedi against the country's major trading currencies, production costs are going up, whilst pressure on businesses to reduce prices are mounting, owing to competition and inability of Government to protect local industries. He also stated that because of the credit crunch and the global economic crisis, Ghanaian businesses are likely to suffer major losses, especially with the cost of borrowing rising steadily.

As part of their concerns, a number of businessmen and -women at Dzorwulu have also expressed their views frustration on the seeming lack of clear policy direction for the economy and Government's seeming incapacity in the face of the fast-falling cedi and fast-rising interest rates.

"When there is an increase in the price of the dollar, the prices of commodities also go higher because we import our goods in dollars,” one businessman, who deals in home appliances, lamented to The Statesman.

"The only other major alternative is for government to help local manufacturers produce much of what we import here. But, that seems like a pipedream.

Mr Olabode of the AGI, continuing, said reports received from all ten regions indicated that businesses were facing difficulties, and advised that much as Government has a right to experiment with policy, they should be bold to change "old policies that are not working and put in place new ones. They should attempt new policies and measures that could help them.

“The Mills government has given various promises about reforming the economy to enable industry to tick. On the basis of those intentions, therefore, they should create an enabling environment for business through effective strategies, like reducing the existing tax regime under which SMEs operate owing to the crunch industry is currently face.