Ghana must position herself well – BoG

Millison Narh, Deputy Governor, Bank of Ghana (BoG), says Ghana must position herself well to attract huge investment funds.

According to him, “Our traditional dependence on commodity exports for foreign exchange continues to face challenges, notwithstanding the commencement of crude oil production.”

The Deputy Governor, who made this known at the launch of BoG’s 5th Foreign Private Capital Flows (FPCF) survey said, “This year, we expect an overall reduction in export revenues from the levels obtained last year. Resources from our traditional donor partners are drying up due to both our accession to lower middle income status and the economic problems in the donor countries themselves.”

This leaves the country with very few options, an important one which is attracting private investment flows which are only obtainable when the nation gets its domestic economic conditions right, he said. Mr. Narh said, “We will strive to maintain macroeconomic stability in the country to improve our competitiveness on the International capacity markets.”

Improving business competitiveness can also help the country to attract long term capital by way of equity as against debt instruments which the nation have had to attract at very high cost in periods of macroeconomic uncertainty, he said. Mr. Narh said Ghanaian businesses should also be prepared to open up to foreign partnership in order to attract equity capital.

“This issue is speculated to be the bane of small and medium-scale enterprises in Ghana,” he said. Mr Narh said opening up to foreign partnership can bring in its trail more capital, technology and expertise, which can result in a win-win situation for both partners.

He said the gradual liberalization of capital transactions had helped to attract foreign capital. “It has however brought along some risks which we will continue to monitor and ensure that they do not derail our efforts at ensuring both internal and external stability”, Narh said.

Nana Owusu-Afari, President, Association of Ghana industries (AGI) said, “Our industries are under pressure from rapidly emerging global markets which manufacture at lower costs than we do.”

He said the economy would see significant growth if government gives additional support to the private sector while making manufacturing viable enough to attract FDIs. “As a country, we have over-focused on bringing inflation down using the inflation targeting model,” Owusu-Afari said.

This, he said, had not helped because when inflation was at a single digit, interest rate never came down. Owusu-Afari said, “We all thought the macroeconomic policies will help stabilize the cedi but this did not happen as the cedi depreciated by about 12 percent last year.”

“Our import bill continues to exceed our export revenue. From the private sectors perspective, we think we have not seriously researched to find out the underlying problems facing the economy,” he said.

Owusu-Afari said AGI had consistently called for evolving policies to add value to new materials that the nation continues to export in their raw state.

He said his outfit also asked government to institute the necessary production incentives to scale up the contribution of the manufacturing industry to GDP. “It is only by tackling these with some zeal and commitment that we will be able to remove some of these fundamental growth challenges that continue to hunt the private sector.”