Key issues for businesses in 2015 budget

The 2015 Budget announced several policy initiatives some of which are crucial for the survival of industry. We throw some light on aspects of the budget which have a bearing on the development of small to large enterprises in Ghana and what they stand to gain in 2015.

Business Development Programme for SMEs

COME next year, 95 new Business Advisory Centres (BACs) will be established to provide Business Development Services (BDS) to Small and Medium Scale Enterprises (SMEs) in almost all districts in the country.

In addition, 30,400 rural poor people will be provided with skills training in community-based income generating activities, small business management and marketing.

Furthermore, 16,500 operators of rural, micro and small enterprises will be given all year round business counseling services

The project which comes under the Small Medium Enterprise and Entrepreneurship Development Programme of the Ministry of Finance will continue to facilitate the participation of emerging and existing small businesses in mainstream economic activities.

This year, the Rural Enterprises Programme (REP) in collaboration with National Board for Small Scale Industries (NBSSI) and GRATIS Foundation has carried out business development services within rural communities at the district level.

New Trade Offices in China, Turkey…

To diversify Ghana’s market for exports, particularly the Non-Traditional Exports (NTEs) and promote trade and investment, the Ministry of Finance has announced the establishment of four new trade offices in China, Turkey, South Africa and Japan.

It is expected that these offices will help increase Ghana’s exports into those countries.

Additionally, the Ministry Of Trade and Industry will in from next year commence full implementation of the National Export strategy towards the realization of the $3.70 billion target from Non-traditional exports.

Public-Private Partnerships for Industrial Parks

Government has indicated its preparedness to partner the private sector to develop industrial parks at strategic locations across the country.

This is aimed at creating “industry specific” parks that take advantage of the economic and knowledge potential of those particular locations.

Preparatory works to attract private investors into establishing an Information Communication Technology (ICT) Park at the University of Cape Coast (UCC) to take advantage of the central region as a knowledge-based hub will commence next year.

Smartphones to be duty-free

The 2015 fiscal year will see the removal of taxes on the importation of smartphones into the country, government has announced.

The tax removal component, is part of the ways through which government seeks to promote the mobile phone business in the country.

The Customs and Excise Amendment Bill 2013 introduced the increment to enable government raise GH¢49.8 million as tax revenue to support developmental activities for the year.

However, mobile phone dealers in the country have constantly complained of the effect of the 20% tax imposed on the importation of telephone handsets.

Energy

Government has maintained that it has a strong focus on power to facilitate economic development.

It reckoned that that adequate supply of energy remains a major challenge and admitted that this year, the cost of doing business in Ghana has gone up because of disruptions in electricity supply.

Energy remains an absolutely critical requirement for sustainable economic growth and development and consumers in general have had to live with the discomfort of the power outages and its attendant effect on the prices of goods and services.

In 2015 the Energy Sector has been allocated GH¢310.57million out of which GH¢241 million is planned to be spent on rural electrification by the end of the year.

An amount of GH¢247.51million has been set aside to, specifically, fund SHEP infrastructure projects in 2015, while GH¢15.00million has been provided for the Rural LPG Promotion Project

Development of Ghana’s Capital Market

Government is widening the scope of financing opportunities through measures such as the issuance of the 7-year domestic bond and the regular publication of an issuance calendar among others.

Since its establishment, Ghana’s capital market has gone through various stages of developments. Today the market is highly regarded as one of the best performing markets on the African Continent.

Notwithstanding these, government and the private institutions have not taken advantage of the capital market to raise long-term capital to optimise their operational activities.

Analysts have called for the integration of Ghana’s capital market into regional markets such as Nigeria as well as in Francophone markets.

They maintain that the development of such interrelated markets would not only contribute to regional financial stability but also strengthen related companies in the economy.

Access to regional markets

Government has indicated it will facilitate the increased participation of Ghanaian companies in trade fairs abroad and vice versa as well as report on multilateral and trade meetings in order for Ghanaian companies to take full advantage of preferential access to markets abroad.

In that connection, Ghana will lead the ECOWAS team to ensure the formal signing of the Economic Partnership Agreement (EPA) with the European Union (EU) as soon as possible.

Promotion of Ghanaian goods

The Ministry through its Made-In-Ghana promotions of Goods and Services via initiatives such as the National Everyday Wear Programme and the Web-Based Product Gallery which enables SMEs exhibit their products on the world wide web, succeeded in displaying over 5000 products from 700 enterprises in Upper East, Upper West, Northern, BrongAhafo and the Central Regions on the website.

The Ministry in 2015 will further support the initiatives and expand the scope to cover other strategic products such as rice and poultry. The five remaining regions will also be covered under the Web-Based Product Gallery initiative.

Review of Tax Exemptions

In 2015, government will abolish the use of the VAT Relief Purchase Order (VRPO) in granting of relief.The refund system will be beefed up to pay refunds when the request are duly vetted and certified.

Tax exemptions granted in loan agreements will also be reviewed to reduce the scope of exemption granted and the use of special permit will be drastically reduced.

Government has also announced the review of the Free Zones Act in 2015 to enhance the relevance of activities in the sector so that greater emphasis is placed on manufacturing and value addition.

Additionally, the corporate tax rate of companies after the enjoyment of the ten years tax holiday will be increased from 8 percent to 15 percent.

Broiler programme to be revamped

This programme is aimed at reducing the importation of chicken by 40 per cent by the end of 2016.

This is being implemented by the Ministry of Food and Agriculture in collaboration with the Ministry of Trade and Industry and the Ghana National Poultry Farmers Association.20 million broilers will be produced and this will result in 60,000mt of Poultry meat. It is expected that Ghana will save about US$132 million and reduce poultry import by 38.9 percent