Business confidence, for the second quarter of this year, has increased marginally as compared with that of the previous according to the Association of Ghana Industries’ (AGI’s) Business Barometer.
The business confidence index surged to 104 from 100.5 recorded in the first quarter of the year.
According to the AGI, the reduction in electricity tariffs has given the industry some relief and level of confidence going forward.
President of AGI, Dr Yaw Adu Gyamfi, presenting the report said despite signs of recovery, the local industry is still under pressure and one of the major challenges is high exchange rates.
“The Association notes with concern, related developments in the Ghanaian economy and reiterates that the influx of imports remains a major risk to growth of the industry and the country’s job creation prospects; instances of weak local currency and exchange rate volatilities as experienced in Q2 reflect the import-oriented nature of our economy,” he said.
Local currency depreciation
The Association said businesses came under intense pressure from free-fall of the cedi in Q2 – a situation it says was contrary to business expectation.
Dr Adu Gyamfi said the local currency yielded to pressure from the world’s major trending currencies thereby impacting the cost of doing business.
The Association has, therefore, urged the government to institute appropriate measures to prevent further pressure on gains made.
Mid-year budget review
The AGI has expressed concern over the current straight levy regime introduced in the mid-year budget review, where manufacturers can only claim 12.5%
VAT, leaving 5% as cost burden, passed on to consumers.
According to the association, the situation leaves manufacturers less competitive.
The AGI is pressing on the government on the need to introduce a tax regime that is more transparent and predictable.
It also seeks one-month grace period to allow businesses to align their books with the new straight levy regime.
AGI lauds BoG
The Association has lauded the central bank for its resolve to take action against local banks with liquidation challenge.
It says, even though it regrets the collapse of the seven local banks, the action was necessary to bring reforms in the banking sector to forestall any future insolvency of other local banks.
Ghana Industrial Bank
The president of AGI says his outfit is still committed to establishing its own bank to facilitate access to credit by, especially SMEs.
Earlier, the Association hinted it had initiated the process of establishing a bank to support the local industry.
Dr Yaw Adu Gyamfi who revealed the proposed name of the bank as Ghana Industrial Bank, says his outfit has put the process on hold awaiting the dust to settle on the current developments in the banking sector.
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