Private sector Stakeholders say they could be the engine of total transformation of the Ghanaian economy if the challenge of the high cost of doing business, especially access to funding is addressed.
Players in the sector unanimously reiterated that local businesses continue to post losses due to the high-interest rate regime.
The concern was expressed during a day’s event in Accra to discuss the findings of a research on Business Environment and Constraints in Ghana, with the aim of bringing the worry of the private sector to the attention of the government.
Dubbed, “A thriving private sector: The key to sustainable socio-economic growth” the forum was organised by the Institute of Economic Affairs (IEA), with support from the Business Sector Advocacy Challenge (BUSAC) Fund.
Aside from the high cost of doing business, the study identified other challenges faced by the private sector, including limited access to long-term credit, the high cost of credit, erratic energy supply and high utility charges.
Dr William Brafu-Insaidoo, IEA Research Fellow, who presented the findings of the study, said factors that contribute to a steadily deteriorating business environment and a crippled private sector could be dealt with at the policy level.
He said the current economic trends showed that the desired contribution of private businesses to economic growth and job creation had not been achieved due the high cost of credit and suggested to the Bank of Ghana to encourage banks to make transparent, the formula for base rate determination.
Dr Brafu-Insaidoo recommended to the government to put in place effective and efficient measures to ensure a long-term stability in the country’s macroeconomic environment.
On the challenge of the high cost of electricity identified by the study, he recommended that, government needed to move towards gas power generation to further reduce the cost of power to create an enabling environment for the growth of businesses.
The Research Fellow said inexpensive electricity would boost industry and accelerate the government’s programme of industrialization, as one of the means to push forward national development.
He suggested that, as part of the steps toward making power cheap, there was the need to improve the efficiency of electricity production, installations and distribution.
“Ghanaians pay more per Kilowatt hour of electricity compared to neighbouring countries. This is partly attributable to a major reliance on light crude to fuel power plants. Electric power transmission and distribution losses in Ghana currently stand at about 20 per cent. These losses include transmission between sources of supply and points of distribution and in the distribution to consumers, including pilferage”.
Touching on economic legal regime Dr. Brafu-Insaidoo urged the government to speed up the passage of the Public Private Partnership Bill of 2016 to help leverage funds from the private sector and also widen the scope of the Ghana Infrastructure Investment Fund to explore possible sources of raising funds to support businesses.
Eric Osei Assibey, a senior fellow of the Institute, said the state needed to take bold steps by translating the usual phrase of making the private sector the engine of growth to actions by providing the needed infrastructure and policy that would enable the private sector to thrive.
He explained that it would include the provision of road networks, to ease the transportation of raw materials to markets as well as facilitate the carting of goods from factories for export.