Private sector engine needs fuel

Three political parties have set out their stall to improve the fortunes of the private sector, each promising to provide fuel to lubricate what has often been called the economy’s “engine of growth”.

At a roundtable covened by Citi fm in Accra to discuss “The Private Sector Agenda for 2012 and Beyond”, speakers from the ruling National Democratic Congress (NDC), New Patriotic Party (NPP), and Convention People’s Party (CPP) laid out plans to grow the private sector as a catalyst for employment creation and economic development.

Minister of Trade and Industry, Hannah Tetteh, said the next NDC government will see to the full implementation of the Private Sector Development Strategy II (PSDS II) -- the successor to PSDS I -- that contains policies to improve the investment climate, diversify the economy, and boost productivity.

“PSDS II was informed by wide consultations with the local private sector. And in it, we want to build on the successes that we achieved with PSDS I,” she said.

The NDC’s 2012 manifesto enumerates areas of focus under PSDS II which include support for the private sector to enhance the use of modern technology, expanding access to medium- and long-term financing, and doing business with the private sector through public-private partnerships.

Ms. Tetteh, who directs campaign communications for the NDC, said her party has reorganised the Export Development and Investment Fund (EDIF) into the Export Development and Agricultural Investment Fund (EDAIF) to broaden the scope of support given to producers by the fund. EDIF was created in October 2000 as a vehicle to subsidise credit to the export industry.

The NDC, according to Ms. Tetteh, will expand economic infrastructure through current and future investments in transport, energy, and the ports. She said investments in energy such as the gas development project will boost power generation to 5,000 megawatts by 2016.

“We also have to improve our transport and logistics performance because we often find that carrying goods from the factory to their market destinations adds additional high costs to ex-factory prices. That is why the infrastructure investments are important.”

Yoofi Grant, who coordinated the team that wrote the NPP’s 2012 election manifesto, reiterated his party’s quest to industrialise the economy by increasing manufacturing and value-added production in the private sector.

He said the NPP will use trade policy as a tool to encourage domestic production and value-addition. “Our trade policies do not seem to support the view that we need to industrialise. As a policy, we are going to review that whole regime.”

To make private businesses more competitive, he said his party will address the problem of access to capital by attracting private equity and venture capital firms to Ghana to augment the banking sector’s resources.

The NPP, he added, will establish an industrial bank that will employ its resources to promote industrial initiatives of the private sector. Infrastructure will also be aggressively expanded to lower business costs, he said.

Touting his party’s pro-business reputation, Mr. Grant said an NPP government will engage the private sector in business policy decision-making. “We want to have monthly private sector meetings with the President.” Ekow Duncan, Chairman of the Political Committee of the CPP, said the development policy orientation of government is a crucial determinant of the fate and performance of the private sector. He hailed the CPP’s economic interventionism as a superior development model compared with the “free-market fundamentalism of the NDC and NPP”.

“The starting point is the development policy framework of the various political parties. That determines what we’re going to do and how we’re going to do it. And that is where we differ from the NDC and NPP,” he said. “The private sector is the engine; the government is the driver. So the CPP will intervene in the market and lend a hand to the private sector.”

He said his party’s policies will solve underproduction and unemployment, which he called “the greatest obstacles to our development, growth and prosperity”.

The CPP, he said, will support industrial sugar-cane production for biofuels and ethanol, and increase soya bean and rice production. It will, he added, establish agro-industries to process cocoa, cashew and shea nuts. These initiatives, he said, will reach the biggest segment of the private sector that is involved mainly in food and agricultural production.

Responding to the parties’ submissions, George Kweku Ofori, President of the Ghana Union of Traders’ Association (GUTA), said: “For us in the private sector, we think that the engine of growth needs a lot of lubricants.”

He expressed sadness about the cedi’s recent volatility which increased the cost of importation and taxes, threatening the businesses of importers. The cedi, according to the Bank of Ghana, slumped by 18% against the main currency of imports, the dollar, between January and August this year, though it has since reclaimed about a third of its losses.

Mr. Duncan blamed the widening trade deficit for the cedi’s woes, positing that the way to secure the currency’s value is to rebalance the external sector by stimulating exports and cutting back on imports.

Ms. Tetteh, who said the government has succeeding in halting the cedi’s fall, said Parliament has amended the Excise Act to limit taxes on raw material imports as a way to reduce the cost of domestic production.

Mr. Grant said the NPP will strengthen economic management to ensure a stable macroeconomy that is conducive to business planning. “We are going to keep our eye on the ball, because without macro stability we can’t have a competitive business environment.”