Business News of Wednesday, 16 January 2013
Source: Graphic Online
Private sector groups in the country have called on President John Mahama to fully implement his promise to be an ally of the sector by creating a low cost business environment to make enterprises competitive in the global market place.
The business community said by being a good ally of the sector, they did not expect the President to give them hand-outs per se, but it can use several channels and strategies such as public procurement, direct credit and macroeconomic environment in which interest and exchange rates were stable to grow the private sector.
That partnership with the private sector would create jobs, prevent capital flight and ensure real sustainable economic growth in the country.
“It’s a welcoming news, especially considering that the President has on various fora expressed similar interest to work with the private sector and we are satisfied with his intensions,” the Executive Director of the AGI, Mr Seth Twum Akwaboah, told the GRAPHIC BUSINESS.
The President during the Presidential Debate organised by the Institute of Economic Affairs (IEA) made the assertion and during his policy statement as caretaker President also alluded to his willingness to work with the private sector.
The AGI president said partnership with the private sector was the best way to move the economy forward in a sustainable way, as that would lead to job creation and economic development.
The Chief Executive Officer of the Ghana National Chamber of Commerce (GNCC), Mr Samuel Akwasi Sarpong, told the GRAPHIC BUSINESS in an interview that the chamber had high hopes and would expect the President to deliver on his promise.
“The President, even before his election had formed an advisory council of which the GNCC is a member,” he said.
Mr Sarpong was of the view that the formation of the council is a clear indication of the value the President placed on the private sector and “we expect nothing but action to walk the talk”.
In his inaugural address to the nation as the fourth President of the Fourth Republic, President Mahama said “Ghana should, and will, be a place where economic opportunities are available to everyone”.
He stressed that “I recognise the vital role that our private sector, especially small and indigenous businesses play in the expansion of our workforce as well as in the growth and stability of our economy”.
President Mahama further gave the assurance that he will be an ally to the business community adding that “I will extend whatever support I am able to reinforce your contributions to our development”.
The manufacturing sector believes that the government should come in the form of creating a good business environment to reduce the cost of doing business and make the prices of locally produced items competitive in the global market place.
“Making the prices of products competitive is the only way to make the manufacturing sector and the general private sector sustainable, as banks and subsidies cannot be sustained,” Mr Akwaboah explained.
Another way to reduce the cost of doing business is to do an audit of the industrial value chain and encourage the local production of some of the raw materials and intermediary goods.
To that end, the private sector wants all energies and efforts channelled to realising a true local content policy implementation in various sectors. These include oil and gas, mining, housing, energy generation and transportation, especially domestic aviation.
Mr Sarpong argued that for the country’s foreign exchange to stabilise there was the need for industries in the country to grow to produce to meet international standards and export to bring in the foreign exchange.
Mr Akwaboah said one grey area was for the President Mahama administration to explore the strategic use of government procurement to grow the private sector.
To this end, there is good news for the sector because the Public Procurement law has been amended to encourage margin of preference for the benefit of tenders for work done by domestic contractors.
The Chief Executive Officer of the Public Procurement Authority (PPA), Mr Sellas Mensah, last December presented the draft amendments to the Minister of Finance and Economic Planning for onward presentation to Cabinet and Parliament.
Another expectation of the manufacturing sector is the provision of a reliable regular supply of energy at affordable prices.
The AGI executive director said production costs were being padded with the current power tariff arrangement under which tariffs paid by industry subsidises residential tariffs; a phenomenon he said did not augur well for promoting industry, saying “each segment must fully pay for what they consume.”
Growing the private sector requires a lot of financing, particularly medium- to long-term credit and capital and the AGI wants the president to champion measures to bring about improvements in the funding regime and drive down the cost of borrowing.
“The manufacturing sector needs to get cheaper credit to spur growth. The economy can grow, but without the contribution of the manufacturing sector the economy will be volatile and susceptible to external shocks,” Mr Akwaboah stated.
Private sector players are satisfied with existing dialogue channels that exists between the government, its agencies and actors and the private sector, underpinned by regular meetings and consultations.
However, the AGI which is represented on the private sector council wants speedy implementation of policies and programmes meant to inure to the benefit of the private sector.
For example, although the Industrial Policy and the Private Sector Development Strategy was developed somewhere in 2010, it was only in the latter part of 2012 that the Private Sector Advisory Council was set up and chaired by the Vice President.
“What we expect is a deepening of the dialogue and consultative process that is already in place and the speedy implementation of agreed policies and programmes,” Mr Akwaboah said.
He added that “in the past, relations have been very smooth, but sometimes implementation delays and this can hamper good intentions.”
For the chief executive of the Chamber of Commerce, the chamber expected the various government Ministries and Departments and Agencies (MDAs) to work more closely with the private sector since they would be acting on behalf of the President who would sets the agenda for them.
Mr Sarpong said the chamber would make a quarterly assessment of the President’s promise and report on progress, adding “We will also offer our advice where necessary and expect the government to act quickly when issues concerning the sector were brought to their attention.”