The Director of the Institute of Statistical, Social and Economic Research (ISSER), Professor Peter Quartey, says the stimulus support, as provided by the government to cushion businesses in the country amid the covid-19 pandemic, would not necessarily guarantee jobs.
He explains that the stimulus package can only guarantee job security if it is channeled into those areas of the economy that have high demand for their goods and services. Hence only such sectors deserve support.
“So you have to look at all of these and see which of the sectors if we put in money it will stimulate productions, it will ensure that labour is guaranteed employment and that is why in some countries they have said we will pay wages for employers so they don’t lay workers off for the time that you are not producing”, he said.
The Economic Professor made these remarks on the ‘Upfront’ show on Joy News, which was monitored by the Ghana Talks Business on Wednesday, April 29, 2020.
He adds that stimulus support are soft loans which should be paid back. Hence, disbursing them to sectors that have lower demand will amount to nothing because they will not be able to pay it back or even employ anyone in the process.
“Stimulus package is not a guarantee to hire labour. You only hire labour if there is demand for your product, that guarantees your production”, he further explained.
President Akuffo-Addo, on Sunday, April 5, 2020, announced a GH₵600 million stimulus support to support to micro, small and medium scale enterprises (SMEs) as “soft loans scheme”.
This, according to the President, will be in collaboration with the National Board for Small Scale Industries (NBSSI), Business and Trade Associations as well as Rural and Commercial Banks.
The loan, he said, will however have a one-year moratorium and two-year repayment period.
But Professor Quartey, is urging government to be strategic in the disbursement of the stimulus support to ensure that the objectives are met.
“…you need to look at where you put the money. In other words, the stimulus package has to go to sectors that will be producing because there are some that no matter what you do, there won’t even be demand for their services,” he advised.
For instance, he said, services in tourism and hospitality sectors of the economy are not in high demand currently. Most of them have suspended their operations due to the ban of social gatherings. Hence supporting them at this moment will not yield any positive outcome.
He stated that if the support were a bailout then they could be considered. Bailouts are free monies which they will not be required to repay. However, once it is a loan then the money ought to go into sectors in high demand in spite of the impact of the pandemic.
Stimulus package not enough
Meanwhile, the Chief Executive Officer of the Ghana Employers Association, Mr Alex Frimpong, says the GH₵600 million stimulus support is not enough for businesses in the country considering the quantum of challenges that they are currently going through.
However, he added, the sector and the type of organisations that will benefit from the package will be in a better position to tell how useful or relevant it is for them.
“Some of them even if you give them 20 million dollars or more, they will still have issues with the investments. Others if you give them maybe a million cedis, especially for small-medium enterprises of Ghanaian origin, they should be in a position to immediately cope with hardships that they are going through now”, he explained.