Trade competitiveness slips amid challenges – report

Ghana has declined in the latest Stanbic Bank Africa Trade Barometer (SB ATB) rankings, highlighting growing trade challenges in the country.

According to the report, Ghana slipped from 3rd place in May 2023 to 7th in August 2024. This marks a significant drop from its near-top position in September 2022, indicating deteriorating perceptions of trade-related factors such as border efficiency, infrastructure quality, access to finance and governance.

The report points to specific weaknesses, particularly in the quality of infrastructure and Customs processes, as key contributors to Ghana’s poor performance. The country’s infrastructure index fell from 46 in May 2023 to 41 in August 2024, reflecting declining perceptions of trade-related infrastructure like telecommunications, roads and power supply.

“The ongoing power supply issues and telecom disruptions have made trade logistics difficult, further impacting business operations,” the report stated, referencing a representative from the Association of Small Scale Industries.

Businesses highlighted the weeks of internet disruptions, due to damaged undersea cables, as further complicating trade activities.

In terms of governance, businesses expressed dissatisfaction with government support for cross-border trade. The government support index dropped from 48 to 45, driven by concerns about high taxation and unclear Customs regulations. Many businesses reported unexpected taxes and delays at border points, leading to higher costs and extended waiting times.

“Unexpected taxes and lack of clear guidance on Customs duties make it difficult to plan and execute trade activities effectively,” they noted as a concern raised.

This growing frustration has prompted calls for more transparent policies and reduced tax burdens to facilitate smoother trade operations.

Despite these challenges, the report identified some positive developments. Improvements were noted in the areas of import and export revenue growth, credit terms and business confidence. Ghana’s business confidence index rose significantly to 55 in August 2024 from 47 in May 2023, indicating growing optimism among businesses. This increase in confidence is partly attributed to government’s ongoing economic reforms and stabilisation efforts under the International Monetary Fund (IMF) programme that aims to restructure debt and reform fiscal policies.

Access to finance remains a critical issue for businesses in Ghana, particularly for small- and medium-sized enterprises (SMEs). The report highlights a decline in the access to credit index, falling from 39 in May 2023 to 37 in August 2024. High-interest rates, currently around 30 percent, have made traditional borrowing difficult for many businesses.

On the trade front, there were mixed outcomes. While Ghana’s trade openness index decreased from 52 to 48, indicating rising barriers to trade, there was a noted increase in the percentage of businesses importing inputs, particularly, from Asia. Imports from China are expected to rise, bolstered by strengthened economic ties following recent cooperation agreements.

“China offers affordability, availability and quick delivery, making it a preferred source for imports,” the report highlighted – referencing a representative from the National Development Planning Commission.

Additionally, 80 percent of surveyed businesses expect their export volumes to increase in coming years, reflecting cautious optimism about future trade growth.

The report also touched on ongoing efforts to stabilise the economy through the IMF’s US$3billion Extended Credit Facility programme, which aims to support fiscal consolidation and economic reforms. Inflation, while still high at 22.1 percent as of October 2024, is projected to decline gradually as policy measures take effect. The anticipated stabilisation of macroeconomic conditions is expected to provide a more predictable environment for traders, aiding in the recovery of Ghana’s trade performance.

The Barometer highlights both persistent challenges and emerging opportunities within Ghana’s trade landscape. While issues like infrastructure quality, access to finance and government support need urgent attention, improvements in business confidence and trade revenue growth offer a glimmer of hope.

The ongoing economic reforms and enhanced international trade relations are seen as critical drivers for reversing the recent decline and improving Ghana’s position in future trade rankings.

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