Here is a Business Barometer Report from Association of Ghana Industries for the 3rd quarter of 2013 financial year.
Improved Power Supply Boosts Business Confidence In Quarter Three (Q3).
Energy supply related issues have
attracted more attention since the last three quarters. The impact of over 250
megawatts of power added from the Bui dam to the national grid between May and
August was largely felt in quarter three (Q3), according to the AGI Business
Barometer, Q3, 2013. This was a big relief to businesses and it is amazing how
an improved power supply could significantly impact on business even though
there were agitations over the proposed electricity tariffs.
Competitiveness conditions of
basic factors such as cost of raw materials and utility prices have however
proven to be severe obstacles to growth of businesses in Q3.
AGI believes the further removal
of barriers to competitiveness must engage Government’s attention the more if
local businesses are to remain relevant in the current global economy.
SMEs are still seen as pivotal
players in creating economic growth, but their development continues to be
largely constrained by access to credit
and cost of credit as seen in Q3.
OVERALL PERCEPTION OF BUSINESS PERFORMANCE
The overall business confidence
for Q3 boosted significantly while expectations of Q4 ahead dropped marginally
according to the survey. The trend of business seen in Q2 allows a fair
comparison with Q3. A lot more (70%) Captains of industry were more optimistic
of the business climate in Q3 than expected in Q4 with 66.7%.
In general, Q3 was better rated than its previous quarter possibly on
account of an improved power supply as experienced in August.
Thirty-two percent (32%) did not
think business will decline or improve in Q4. The 66.7% Captains of Industry
who felt business performance will improve in Q4 cited improved sales during
the Christmas festivities and purchasing power as reasons. Less than 2% think
business will decline in Q4 on account of high taxation and the utility prices.
Regardless of these potential constraints ahead in Q4, a good majority of the
Ghanaian business community have a positive outlook to business.
OVERALL MAJOR CHALLENGES
Top major challenges were in the
areas of High Utility Prices, Access to Credit and High Cost of Raw Materials
according to the survey. High Utility prices gained more prominence in Q3 than
in Q2 by moving up 5 positions. Industry players had anticipated tariff increments
by the close of the Q3 even though the exact percentage review remained
uncertain. The introduction of special levies impacted significantly on the
cost of raw materials. Access to Credit and Cost of Credit took entrenched
positions between Q2 and Q3. Poor Power supply was the greatest mover between
Q2 and Q3 as it dropped from 1st position to 9th position in Q3. Power
generation has not kept pace consistently with the 10% energy demand projection
each year. However, the impact of the additional megawatts of power coming on
stream was felt in Q3.
Inflation lost its position to
the growing imports which did not feature among the top ten challenges in Q2,
but became manifest in Q3 as competition from imported goods.
CHALLENGES BY SIZE
Table 1: Top 3 Challenges by Size
|
Size
|
Challenges
|
||
|
1st
|
2nd
|
3rd
|
|
|
SME’s
|
Access to credit
|
High cost of raw materials
|
High utility prices
|
|
Large
|
High utility prices
|
High level of taxation
|
Cost of credit
|
|
African Giants
|
High utility prices
|
High level of taxation
|
Depreciation of the Cedi
|
In terms of challenges, High Utility prices was common to all the business categories while high level of taxation was peculiar to only the Large and African Giants in Q3. Access to credit has been peculiar to SMEs and policy makers still face this challenge as long as the problem keeps recurring each quarter and remains unresolved.
CHALLENGES BY SECTOR
There were sectoral variations
in the assessment of business as discussed below.
Agriculture: For a
successive quarter running, access to
credit, high cost of inputs and cost of credit emerged once again in
the same sequence as the top 3 obstacles limiting the development of the
sector. The poor access to credit reflects the limited loan portfolio the
Agriculture sector enjoys from the banks. Where available, the lending rates
can hardly support agriculture business. Poor Infrastructure gained prominence
as businesses complained about poor roads linking production sites to market centres.
The impact of inflation inching up from 11.8% in July to 11.9% closing
September was felt by the Agriculture sector.
Manufacturing:
Quarter three saw a significant
improvement in the power supply situation for manufacturing as this was
relegated to the 8th position from 1st position in quarter two. The sector was
however severely affected by the high
utility prices announced to take effect in October. Quarter three also saw
the introduction of new fiscal policies by Government to address its budget
deficit. The special levies that took effect in August impacted negatively on
the cost of raw materials and these taxes possibly account for the High level
of taxation as experienced by the sector. While high level of taxation
maintained same position in Q2 and Q3, depreciation of the cedi moved up from
7th to 4th position between Q2 and Q3.
Service: Currently
the largest contributor to GDP, the
Service sector remained under pressure from high utility prices and high
level of taxation in quarter three. High cost of utility displaced Poor
Power supply to become the number one challenge of the sector in Q3. Business
thrives better on good infrastructure. It is therefore not surprising that the
infrastructure deficit is being felt across two key sectors.
Construction:
Contractors continued to experience delay
in payments for jobs already done. The delay in payments has persisted
since the first quarter. It still remains uncertain when payments will be
received for the jobs done. While private construction works progressed,
Contractors said many Governments projects are still on hold, except for the
foreign donor-funded projects. These results are broadly in line with the pace
of construction works in the sector. Contrarily to the trend experienced by the
other sectors, high cost of utility was the least challenge for the construction
sector in Q3.
THE AGI BB INDICATOR (BBI)
The BBI is an AGI proprietary
tool that measures the level of confidence in the business environment and
predicts short-term business trend. It simply expresses the state of the
business climate numerically as a figure that ranges between +100 and –100. It
is calculated out of “current” business mood and “expectations” for the future.
By comparison, Q3 registered a
strong business confidence as shown in figure 7 below. Business operators
experienced better prospects in the business climate with the overall indicator
rising from 30.9 in Q2 to a significant 40.8 in Q3.
No comments:
Post a Comment