The free fall of the Cedi against major foreign currencies remains the biggest challenge for businesses in the country. This was revealed in the Association of Ghana Industries (AGI) barometer for the second quarter of 2018.
According to the report, 48 percent of people surveyed said the high dollar rate affect their businesses greatly.
Other challenges for businesses include high taxes, high cost of power, high cost of credit and access to credit.
However the survey revealed that confidence in the economy and businesses expectation for the third quarter remain high.
Speaking to Citi Business News, President of the association of Dr. Yaw Adu Gyamfi said the depreciation of the cedi will continue to drain businesses.
He noted that “looking back into quarter one this year, we noted a number of positive signs including a good mix of macroeconomic indicators. But contrary to our expectations for quarter two, the cedi yielded to pressure from the world’s major trading currencies thereby impacting the cost of doing business.”
High taxes came second on the list with 34 percent, he said.
The businesses attributed it to the new straight tax regime where manufacturers can only claim 12.5 percent of the VAT, leaving five percent cost for the manufacturer.
The Association has warned that the 5 percent will be passed on to consumers thereby causing an increase in the prices of locally manufactured product.
Dr. Adu Gyamfi stressed that “it is worth noting that prior to the mid-year budget review, manufacturers claimed 17.5 percent input and output VAT fully, leaving no cost burden. We will appreciate a tax regime that is more transparent and predictable.”
The businesses admitted that the recent reduction in electricity tariffs has given them some relief but said it is still high compared to other countries within the sub region.
Other challenges to industry growth in the report include the high cost of credit and inability to access credit.
Overall, the business index shot up to 104.8 in quarter two, compared to the 100.5 recorded in quarter one.
By Nana Oye Ankrah/citibusinessnews.com/Ghana