A Business Confidence Survey conducted by the Institute of Economic Affairs (IEA) has revealed that the performance of various firms in the country have worsened, especially in the last six months.

Presenting results of the survey in Accra on Tuesday, Dr John Kwakye, Senior Research Fellow at IEA said the performance of the firms was worsening because of the adverse business environment.

He said 53 per cent of the non-financial sector firms interviewed in November 2014, indicated that their performance had deteriorated over the last six months, compared with the previous year.

He said the financial sector, however, performed better in the last six months, as only 5.7 per cent experienced deterioration in performance.

Dr Kwakye said the business environment had deteriorated in the last months because of the various obstacles facing business, including shortage of energy, high cost of credit, poor infrastructure and adverse macro-economic environment such as high inflation and currency instability.

He said the firms interviewed were however optimistic about their performance in the coming six months which emanated from the fact that, at the time of the interview in November, the country had emerged from a major economic crisis, particularly relating to the cedi and the prospects of the energy crisis improving, as a result of official assurances.

He said based on the results of the survey, there is the strong need to resolve the many constraints facing the businesses as identified.

“Most importantly, there is a need to address the energy crisis as a matter of urgency since the situation is crippling businesses,” he said.

Dr Kwakye also called for the stabilisation of the macroeconomic environment to guarantee certainty in investment and business planning adding that sound public financial management is critical in creating a more conducive environment with respect to the cost of credit, exchange rate and lower inflation.

He said serious interventions are needed to address the unemployment issue at the firm level by introducing incentives such as tax rewards for employment generation.

Dr Charles Jebuni, Director of Research at the IEA, said the decision to conduct the survey was in recognition of the private sector as the key driver of the economy.

“As Ghana’s premier public policy think tank devoted to the promotion of good governance and sustainable economic development, the IEA carried out the survey to obtain qualitative information for use in monitoring the current business situation and to enable us forecast short-term developments in the country,” he said.

The survey covered 93 firms in three key industrial regions namely the Greater Accra, Ashanti and Western, covering firms in the three major sectors of the economy such as agriculture, industry and services.

The number of companies selected from each sector was based on its contribution to GDP and data was collected on among others such as business performance, business environment and business expectations and prospects.