Businesses demand more from gov’t

Discussants at one of the open fora at the recently-ended Ghana Economic Forum (GEF) urged government to actualise the rhetoric of making the private sector the engine of growth by creating the enabling environment for private businesses to thrive.

“Government should move beyond the rhetoric and demonstrate that it is encouraging the private sector’s participation in infrastructure development,” they said.

The outcome of the top-level discussion culminated in a report that was presented by Dalex Finance Chief Executive Officer (CEO), Kenneth Kwamina Thompson.

The business executives pointed out the need for government to take immediate steps to fix challenges in the macroeconomic environment, by prioritising processes to borrow less, stabilising the cedi, reducing inflation and deregulating utility prices.

The discussants suggested that greater involvement of the private sector in infrastructure finance will greatly improve the efficiency and success of infrastructure projects, but only when the environment is right to do business.

“The right environment must be created for private sector participation in debt finance for the improvement of infrastructure in the country,” the report added.

Ghana’s infrastructure gap is valued at US$15billion over the next 10 years; meanwhile, the government is severely handicapped in its ability to borrow to finance the gap.

The report also stated that public sector-funded infrastructure projects are over-priced due to corruption and face undue delay in delivery due to inefficiencies of public sector, while the projects ultimately fail to deliver promised returns.

Ghana’s debt-to-GDP ratio as at March 2015 stood at 65.3 percent, with the International Monetary Fund describing the country’s debt position as being in high distress.

With the economy bedevilled by a never-ending energy crisis, high cost of operations, inflation at 16.9 percent, a free-falling currency, Treasury bill rate at 25 percent, BoG’s own policy rate at 22 percent and a budget deficit of 12percent, many analysts believe that reduced borrowing and prudent fiscal management are the only ways of bringing the economy back on track.

Therefore, the business community believes the only way that the private sector can bring about transformation in the economy is to see government drastically reduce domestic borrowing, which will force banks to lend to the private businesses at cheaper rates -- in turn leading to expansion, job creation and overall growth of the economy.

Business leaders, economists and analysts have also thus chided government for paying so much interest on its securities -- which make the banks go for those investments as they are almost risk-free.

But several high ranking government officials, including Vice President Paa Kwesi Amissah Arthur, have taken a stance against the banks’ over-reliance on high-interest government securities to make profit to the detriment of giving out loans to private businesses.