The Global Competitiveness Index 2017-2018 report by the World Economic Forum indicates that access to finance difficulties, high taxes, and corruption are the three-leading challenges confronting the private sector in Ghana.
The data, which ranks on a scale of 0-20, assesses the 16 most problematic factors confronting businesses in all the 134 economies studied.
In the case of Ghana, access to finance topped with a score of 16.3, followed by high taxation which scored 15.3 — signifying that most businesses in the country consider the tax system high and unfriendly to their operations.
The next problematic factor to businesses in the report is corruption, which scored 12.3 on the scale: again, an affirmation that the age-old canker is holding back growth.
Other problematic factors in the report include inadequate supply of infrastructure, which scored 9.1; inflation – 7.8; foreign currencies – 5.8; and tax regulations – 5.5.
Policy instability scored 5.1; poor work ethic in national labour force – 4.7; and poor public health – 3.9.
Inadequately educated workforce, restrictive labour regulations, and crime and theft ranked least with 1.7, 1.3, and 1 scores respectively.
However, the report is an improvement on the 2016-2017 index – in which access to finance scored 18 points on the scale, with corruption following at 14.4 points, and tax rates scoring 14 points.
To address the top-three challenges, beginning with access to finance, government has revived the Venture Capital Trust Fund with GH₵219million. The Fund is expected to provide an alternative source of capital for companies, in the form of equity, to grow their businesses.
The Bank of Ghana (BoG) has also decreased the policy rate from 22.5 percent in January to 21 percent to date, thereby allowing banks to decrease their lending rates marginally.
Again, to address the challenges of high taxation, government has reduced and abolished some taxes – including the one percent Special Import Levy; 17.5 percent VAT/NHIL on financial services; and 17.5 percent VAT/NHIL on selected imported medicines that are not produced locally.
Others include abolition of the 17.5 percent VAT/NHIL on domestic airline tickets; 5 percent VAT/NHIL on Real Estate sales; Excise duty on petroleum; Special petroleum tax rate from 17.5 percent to 15 percent; Duty on the importation of spare-parts; Levies imposed on “kayayei” by local authorities; and also replaced the 17.5 VAT/NHIL rate with a flat rate of 3 percent for traders.
Also, to address corruption the Akuffo-Addo-led government has initiated moves to establish an Independent Special Prosecutor’s Office that will be solely responsible for dealing with public officials cited for corruption.
The bill is currently in Parliament and is expected to go through the various processes before being passed into law.