The President of the Association of Ghana Industries (AGI), Mr Tony Oteng-Gyasi, has observed that the nature of the government’s subsidy on fuel has provided an incentive for corrupt individuals to enrich their pockets, to the detriment of the country. Citing the case of premix fuel as an example of stimulus packages that could distort the local market, Mr Oteng-Gyasi said while the government had good intentions in subsidising premix fuel, its implementation had only benefited a few corrupt ones, instead of the whole country. Speaking at the first Graphic Business Roundtable Forum in Accra Thursday, he suggested that such stimulus packages should be channelled to places where they would yield the required benefits. “Stimulus packages for production must be designed not to lead to market distortion,” he noted. Speaking on the topic, ‘Business Re-engineering in a Global Recession’, Mr Oteng-Gyasi suggested that the government should instead put up storage facilities where fishermen could store their catch at subsidised rates. Again, he cautioned that any stimulus package that the government would undertake should be in line with the country’s own development needs and not necessarily the imitation of what other countries had done. “A stimulus package restores or boosts demand which producers rush to meet. Idle factories quickly return to work. In the process, they employ more and in paying them continue to boost demand,” he said. He said the vital difference in a developing country such as Ghana was the fact that boosting demand might not necessarily result in local production. Mr Oteng-Gyasi stated that there were reports indicating that governments around the world were looking into detailed operations of business concerns and discussing ways in which their competitive advantages could be restored and evolved. He cited the case of the United States where he said the government had set up a US$70 billion stimulus fund to support small and medium-scale enterprises (SMEs), while in China the government selected 10 industries for technology advancement programmes. He called on companies to take a critical look at their cost structures with a view to eliminating waste and improving efficiency. “As demand falls and markets vanish, the company should aim at consolidating and preserving its market share by passing on cost savings to customers,” he stated. He encouraged local firms to see the global recession as an opportunity to re-think conventional wisdom at all levels. “It is time for the public and private sectors to come together in true partnership for national prosperity,” he stated, adding that business re-engineering in a recession was as dependent on government policy as on the management skills of the corporate world. Mr Oteng-Gyasi questioned what the country had been able to achieve with the commodity boom that it experienced over the years and noted that the construction of the Takoradi Harbour and other infrastructure was undertaken through the investment of the returns of the commodity boom the country experienced. The Managing Director of Barclays Bank Ghana, Mr Benjamin Dablah, a discussant at the forum, dispelled the notion that banks’ interest rates were high and stated that interest rates were determined by countries and not banks. He mentioned some of the determinants of interest rates as the short nature of deposits, which poses huge risk premium when such short-term deposits are lent, the lack of a unique identification system, credit referencing bureau and lending rates among the banks. Source: Daily Graphic