This turnaround, he explained, will empower the private sector as a whole, and the small business sector in particular, to drive Ghana towards economic prosperity, the generation of jobs and a rapid rise in the living standards of the Ghanaian people.
The NPP flagbearer was addressing an extraordinary general meeting of the Association of Small Scale Industries (ASSI) in Tamale, on Monday, August 8, 2016, when he made this known.
Nana Akufo-Addo, addressing a packed hall of members of the association, explained that the importance of the private sector in the development of the economy is the very basis of the NPP’s economic philosophy, adding that “given an enabling environment, the ingenuity and sense of enterprise of the Ghanaian will enable us to build a strong, powerful economy which will deliver a good, dignified standard of living to our people.”
Businesses in Ghana, the NPP flagbearer said, are saddled with many challenges, including the high cost of capital, high cost of doing business, the depreciation of the cedi, and the high cost of electricity and unreliable power supply, which have led to the collapse of many businesses across the county.
Reducing High Interest rates
Lending rates, according to Akufo-Addo, are currently hovering around 35%, with some microfinance operators, who are largely responsible for lending to micro and small scale enterprises, charging between 50 to 70% interest on their loans. Businesses, the NPP flagbearer added, are, therefore, constrained from making the required investments that will grow their businesses and create jobs.To this end, Nana Akufo-Addo indicated his government will bring down interest rates to affordable and competitive levels, by, amongst others, restoring and maintaining macroeconomic stability through fiscal discipline.
“In this regard, we will pass a Fiscal Responsibility Act and reduce government borrowing to make more money available for banks to lend to the private sector to reduce interest rates. Fiscal discipline will also result in a reduction of government borrowing and a crowding in of the private sector,” he assured.
Additionally, the formalization of the Ghanaian economy, through the establishment of a national database, using the National Identification System as the primary identifier, with linkages to the databases of institutions such as the Police, NHIS, Passport Office, Immigration, Courts, Ghana Revenue Authority, and DVLA, Akufo-Addo said, will be done.
This, according to Nana Akufo-Addo, will facilitate the movement from cash payments to mainly electronic payments through bank accounts, and for financial inclusion purposes, adding that “the goal of financial inclusion is to make sure most of the bankable public have bank accounts. This will increase the supply of savings into the financial system and result in the reduction of interest rates.”
Addressing Cedi Depreciation
For a small open economy like Ghana’s, the persistent depreciation of the cedi, according to Nana Akufo-Addo, is worrying because it ends up increasing the cost of living and the cost of doing business.The poor management of the macro economy, he said, has led to exchange rate instability, and an unprecedented depreciation of the Ghana cedi, which has lost over 200% of its value since January 2009, exchanging at GH¢3.95 to $1 in July 2016 as against GH¢1.2 to $1 in December 2008.
“These developments have had a serious, negative impact on the cost of doing business, since Ghana is, unfortunately, still essentially, an import dependent economy. The NPP will stabilize the currency exchange rate through prudent and disciplined macroeconomic management, an increase in domestic production, and an increase in exports,” he assured.
Reducing cost of doing business
With Ghana currently ranked 114 on the World Bank’s Ease of Doing Business index, Nana Akufo-Addo explained that the major contributory factors leading to an increase in the cost of doing business in Ghana have been the multiplicity of taxes, levies and duties, high cost of utilities, erratic supply of electricity, high cost of rent, fuel, communication, transportation and other logistics.In order to make Ghanaian enterprises more competitive, Nana Akufo-Addo reiterated his commitment of abolishing duties on imported raw materials, machinery and equipment; reviewing all taxes and levies imposed by MDAs, including Metropolitan, Municipal and District Assemblies on businesses, particularly small scale enterprises; and introducing measures to restore macroeconomic stability and stabilize the local currency.
The NPP flagbearer also assured that his government will facilitate access to dedicated land spaces in every Region for the establishment of multi- purpose industrial parks, sector specific business enclaves, and enterprise free zones.
Addressing the operational and financial constraints faced by micro and small scale businesses engaged in the import and export trade, Nana Akufo-Addo assured that his government will, amongst others, enforce existing regulations and, where appropriate, introduce new legislation to protect the interests of small scale Ghanaian enterprises in domestic retail trade.
Additionally, his government, he noted, will introduce new government procurement regulations to support “Made in Ghana Goods”, in addition to the enforcement of local content provisions in existing legislation.
Ending Dumsor
It remains an undeniable fact that the high cost of electricity and unstable supply of power constitute some of the most critical challenges confronting Ghanaian businesses, particularly small scale enterprises.According to the World Bank’s Enterprise Survey, businesses in Ghana lose about 11.5% of their annual sales due to power outages compared to 5.5% average loss of revenue within sub-Saharan Africa. Additionally, whilst it takes 33 days within sub-Saharan Africa to obtain electricity upon application, Ghanaian businesses have a waiting period of 45 days.
This, according to Nana Akufo-Addo, has significantly contributed to the poor performance and lack of competitiveness of small businesses, as they have and still continue to grapple with the problem of DUMSOR as they have over the last five years.
“The Mahama government, after claiming to have fixed the problem, is today embarrassed to admit that DUMSOR is still with us. But the evidence is clear to all of us. We have evidence-based DUMSOR! The dumsor problem is ultimately a financial problem and I would like to assure you all that an Akufo-Addo government will end DUMSOR by resolving the financial problems facing our utilities,” he assured.