Businesses highly optimistic of economy

The Association of Ghana Industries’ (AGI) Business Barometer third quarter report shows that 83 percent of companies have high expectations that the business climate will improve in the next six months.

This compares favourably to the 71 percent in the second quarter survey that had high expectations of improvement in the business operating environment.

However, 43 percent of business executives perceive the overall business environment as unchanged in the last six months, as against 39 percent in the second quarter.

“Most businesses are coasting. While the business climate hasn’t gotten worse over the past six months, most CEOs think things haven’t really gotten better,” says the President of the AGI, Mr. Tony Oteng-Gyasi.

The service companies are the most optimistic, with an estimated 90 percent affirming that business will be better.

Significantly, executives who thought they were worse off dropped from 45 percent in the last barometer to 28 percent currently; however, three percent of businesses still expect a worse business climate in the next quarter.

The results also showed that cost of credit, inflation and access to credit resurfaced as the three major challenges confronting companies in Ghana today.

“The AGI has consistently stated its position to the Bank of Ghana that measures aimed at reducing cost of credit are not achieving the desired goals, and there is therefore need for the Central Bank to vary its methods now,” Oteng Gyasi said.
By sectors, cost of credit and inflation emerged as the key challenges confronting the manufacturing sector many of which are already under-capitalised.

Agriculture has cost of credit and access to credit as its key challenges. Statistics show that consistently the share of total bank credits to business in the agricultural sector has dwindled and is presently in the region of four percent. The agricultural industry contributes over 50 percent to GDP.

Inflation and cost of credit are the key challenges facing the services, while for other industries – or the construction and mining sectors – cost of credit is the major challenge.

Other challenges that the business barometer revealed include a decline in both purchasing power and local economic activities in general; poor access to and availability of quality raw materials and inputs needed for production; as well as inadequate production for local industries exposed to competition from foreign trade.

The quarterly AGI Business Barometer is a replacement of the previous annual AGI Business Climate Survey, and for the current survey a total of 279 executives of micro to big companies from various industries across the country were interviewed.

Source: Business and Financial Times

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