The Institute of Economic Affairs (IEA) has called for agriculture transformation to give credence to the development of the raw materials sub-sector in Ghana.
In its latest Business Confidence Survey (BCS) Results 2017 report, launched today in Accra, IEA urged the government to quicken the implementation of its flagship programmes “One District, One Dam” (1D1F) and “One Village, One Dam” (1V1D) initiatives to create the necessary backward and forward linkages with industry.
It urged the government to further ensure the full implementation of the Common External Tariff (CET) that grant zero per cent tariffs on imported raw-materials.
It also encourages local firms to source for a greater percentage of their raw materials locally for their production activities.
The BCS published bi-annually since 2014 is independent, objective and conducted to supplement the surveys conducted by the Bank of Ghana and the Association of Ghana Industries.
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According to IEA, their decision to conduct the BCS is in recognition of the private sector’s role as the engine of growth.
The report called on the government to stimulate demand by stepping its expenditure to boost aggregate demand.
It indicated that 46 per cent of businesses interviewed better in the second half of 2017 compared to 31 per cent recorded in the first half of 2017.
According of the report, the performance of businesses in both the financial and non-financial sector improved in the second half of 2017.
It said 71 per cent of businesses surveyed in the financial sector performed better in the second half compared to 58 per cent recorded in the first half of 2017.
It indicated that 44 per cent of businesses surveyed in the non-financial sector performed better in the second half compared to 27.7 per cent recorded in the first half.
The report said 51 per cent of businesses indicated that the business environment improved in the second half of 2017 compared to 44.95 per cent recorded in the first half.
It called on the government to impose special taxes on selected imports for which the country had competitive advantage and to protect the country’s critical local industries.
On taxes and utility charges for businesses, the report said there was the need for further reduction in utility tariffs because it has the potential to spur production.
It noted that there was the need for further probing to identify specific taxes that tend to have negative effects on local businesses and determine appropriate measures to reduce their statutory.
The report called on the government to ensure that the relative stability of the exchange rate now was sustained over a long period of time and that value should be added to exports to improve foreign exchange earnings.
On high cost of credit to businesses, the report called on central bank to encourage banks to make transparent the formula used to determine the base or reference rate.
It also called for the creation of incentives to make financial savings attractive to reduce cost of funds to the banks.
It said there was the need to deal with high non-performing loans to reduce high lending rates and forestall declining credit to the private sector.
The IEA 2017 BCS focused on business performance in the first and second halves of the last year and highlighted the expectations of businesses for the first half of 2018.
It sampled businesses from three key sectors of the economy namely the agriculture, industry and services sector.
Companies were selected based on their relative contribution to Gross Domestic Product (GDP) across four key industrial regions; thus, Greater Accra, Ashanti, Eastern and Western Regions and the response rate represented 85 per cent of targeted samples of 200 businesses.