Business leaders expect good third quarter performance

Accra, Aug. 5, GNA - The business community in Ghana is highly optimistic that companies will do well in the third quarter of 2011 basing hopes on expectations of improved market, enhance productivity of workforce, and increase in the purchasing power of consumers.

The conclusions are contained in the Association of Ghana Industries' Second Quarter 2011 Business Barometer, where about 66 per ce= nt of the CEOs (Chief Executive Officers) interviewed indicated that they expected the performance of their businesses in the third quarter to surpas= s that of the second quarter this year.

On the contrary, eight per cent of the respondents thought their businesses would perform poorly in the third quarter because of high level of taxation; new government policy and high utility prices. The remaining 25.7 per cent of the CEOs said the performance of their firms would remain unchanged in the 3rd quarter due to lack of market, high utility prices, and high cost of raw materials.

Presenting the results of the survey, Mr Seth Twum-Akwaboah, Executive Director of AGI, said access to credit and high cost of credit emerged as the top two critical factors hindering growth of businesses in the country.

This, he said, provided ample evidence that financial intermediation in the country was still poor in spite of significant increase in the number of commercial banks over the last ten years.

"Difficulty in accessing credit and high cost of credit implies industry is unable to harness new technologies for improved productivity through retooling. For this reason, companies operating in Ghana have become less competitive," Mr Akwaboah said. Other overall challenges include lack of market, delayed payments and poor infrastructure.

On sector by sector basis, the top three challenges restricting development of the manufacturing sector are high utility prices, access to credit, and high level of taxation.

In the agriculture sector, access to credit, high cost of raw materials, and cost of credit emerged as the top three factors limiting the growth of the sector.

The service sector identified high level of taxation, cost of credit, and access to credit as the key challenges slowing down the expansion of the sector whilst the construction sector ranked access to credit, delayed payments, and cost of credit first, second and third, respectively, as the main obstacle to its growth.

A greater per cent of the CEOs interviewed (i.e. 35%) said their current business performance for 2011 quarter 1 was better than that of 2011 quarter 2 (about 31%).

However, only 25.7 per cent of respondents in quarter 2 of 2011 felt their businesses have performed poorly presently compared to 29 per cent wh= o said the same in quarter 1 of 2011.

There was a marginal increase in the number of CEOs, who expected a boost in the performance of their businesses, from 65 per cent (2011, Q1) t= o 65.9% (2011, Q2).

Whilst those, who expected the performance of their business to remain unchanged were about 26 per cent in both quarters, nine per cent and eight per cent expected their businesses to perform poorly in 2011 quarter 1 and 2011 quarter 2 respectively.

The AGI Business Barometer Index measures the level of confidence in the business environment and predicts short-term business trend. Quarter 2 of 2011 recorded a positive indicator of 30.3 which indicates a marginal increase in business expectation over quarter 1 of 2011 (which recorded an indicator of 30.0).

This means the CEOs interviewed were more confident in the business environment in quarter 2 of 2011 than quarter 1 of 2011.