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The retrospect of Ghana’s economy and its prospect: Franklin Cudjoe’s surgical views



Ghana’s economic slump from the top 5 economies with the highest growth rate shocked many economic watchers across the globe. Ghana in 2011 historically achieved a record high GDP growth rate of 14%.

The country however failed to sustain that growth and by 2014, it had crashed to a record low (in about 25 years) of 4.2%, below the Sub-Saharan African average of 5%.

On the streets of Accra, the real impact of the economic nose dive had resulted in high cost of living, spiraled prices of goods and services as a result of the direct bearing on the weakening Cedi against the major trading currencies.

The Cedi cumulatively depreciated by nearly 15% to the international currencies by the third quarter of 2015 alone. The Finance Minister, Seth Terkper, in his 2016 budget statement told Parliament in November 2015 that the estimated growth rate for 2015 was 3.5% but it was expected to improve to 4.1% by the end of the year.

As if government’s struggles to deal with this weak economic fundamentals were not enough, the country’s energy crisis, popularly known as ‘Dumsor’ worsened. It literally crippled the country’s productivity, forced businesses to close down, while others with astronomical increase in cost of production had to dismiss workers.

In 2014 alone, the power crisis caused the country, a conservative figure of nearly GHc1 billion, according to the Institute of Statistical, Social and Economic Research (ISSER).

In April 2015, the Employers Association of Ghana announced that about 13,000 jobs had been lost in just four months into the year. As a result of all these, many would agree that the Ghanaian economy suffered an undeniable crisis in the year 2015.

In finding lasting solutions to this endemic cankerworm, Team Vaultz, called on the President and Founder of one of Africa’s foremost think tank group (IMANI), Mr. Franklin Cudjoe to assess the country’s economic condition and proffer practical solutions that can boost the economy coming into the year 2016 and beyond.


“The Ghanaian economy is expected to slow down to an estimated 3.9% growth rate in 2015 from 4.2% in 2014, owing to a severe energy crisis, unsustainable domestic and external debts burdens, and deteriorated macroeconomic and financial imbalances”, said the African Development Bank Group on Ghana Economic Outlook 2015.

It was in no surprise then to many economic pundits and analysts when the economy suffered such a setback in performance in the year 2015.

But the expectations of the populace were for the government to find solutions to curbing this situation when the warning signals were alarmed on the outlook for 2015 by all concerned actors such as the World Bank Group, African Development Bank Group etc.

Coming into the year 2015 with the challenges rolling from 2014, many believed government could have salvaged the situation based on his Better Ghana Agenda assurance. But the survey conducted by The Vaultz proved otherwise.

The year 2015 will forever be remembered by many Ghanaian as a result of its many negative impacts. Many businesses on a random survey attested to the economy’s slowdown.

“It was a complete shambles. Even if you use the government’s own parameters it set in terms of the single digit inflation, it failed. Growth rate of about 8% that the government wanted to achieve, it couldn’t achieve.”

Mr. Franklin Cudjoe lamented. In February 2015, the IMF announced the deal revealing that Ghana will receive US$940 million from the Fund to help turn the ailing economy around.

This and many more simply portrayed the economy was failing and it needed the requisite support. “That is why I said the economy was in shambles; otherwise we wouldn’t have gone to the IMF in the first place…

For anybody to suggest the economy did any better in 2015 obviously was not living in Ghana, I mean with all the energy problems we faced.”


Government and the Bank of Ghana have struggled to curtail the recurring depreciation of the Cedi against the major international trading currencies.

In the second quarter of 2015, the Bank of Ghana (BoG) intervened on the foreign exchange market with a daily supply of $20 million to allow foreign investors to participate in the country’s short-term debt instruments.

This was in a bid to boost liquidity on the money market, after another nose dive by the Cedi. Ghana’s economy, which is heavily import dependent, is usually very exposed as a result of such activities.

Also the po licies – monetary and fiscal, that are supposed to guide the currency looks incoherent and hence affect its effect in the market space.

“Monetary policies and fiscal policies are supposed to go hand in hand. But we have a disjointed process where the fiscal policy is out of gear because the government borrows exceedingly and does not necessarily use it as expected and that results in such situations that lead to the depreciation of the currency.

The government is not just borrowing too much and crowding out the private sector, it is also because the government is the dominant player in the economy.

It does a lot of the investment and it is expected that such investments would yield the right dividends.”

In solving this perennial issue on depreciation of the currency, IMANI boss suggested that Bank of Ghana should be strengthened to demand effective answers from the Central government as well as publish the minutes of the committee’s meetings to inure transparency in the overall activities of the committee.

He further advised that the foreign minister instead of requesting ‘freebies such as school buildings’ should rather consider technology transfer or take advantage of the EPA’s which are tax free and all these shall help to reduce the exposure of the local currency.

“To some extent, Bank of Ghana may even decide not to lend money to the government. One of the things it should do is to make sure that government’s borrowing does not exceed 10% of the previous year’s revenues – which previously has been flouted several times.

I think, we need to now give a lot of power to the central bank to be autonomous,” the IMANI boss advocated.



The World Bank had previously suggested that $10 billion dollars could solve the infrastructure gap of the country.

Mr. Cudjoe believes that if successive governments had committed to putting aside $1 billion yearly to narrow the infrastructure deficit, it would be too simplistic to believe that would automatically deal with the infrastructure gap in 10 years.

“It sounds simplistic but if we were in a society in which pragmatism, honesty played a particular role, then the issue about simplicity will not probably matter.

Given the fact that we have a situation in this country where we are not so clear in terms of our budgeting processes and contracting arrangements, it is very difficult for anyone to understand why putting a billion dollars a year aside may actually solve the problem.

As a sequel to this, the sources of revenue for these kinds of projects have got to vary. It has to be more of, probably, a Public Private Partnerships (PPPs) approach i.e. 70%- 80% private and 20% public.”

The Ghana Shared Development Growth Agenda clearly states how some of these gaps should be narrowed by the government.

However, it seems to be a contest between realistically what the party in government would do as against what they believe would bring in a more sustainable growth.

“It is largely dependent on the priorities of government indeed. If the priority of the government is that they would like to support people who they believe are vulnerable and excluded and so would set up all manner of funds to secure the livelihoods of these people, then of course automatically, it will affect some of the money that should have gone towards such projects.

It will be based purely on the objectives of the government. To solve that issue it will require pragmatic approach from the government on what it wants to achieve during its tenure of office. ” “At the end of the day, politicians do what they have to do in order to stay in office,” Mr. Cudjoe added.

He however believes that the media and civil society organizations should force governments to make the hard choices of a more sustainable development for the country vis-à-vis the options of making political decisions that will keep them in political power.

In the area of power and the privatization of the Electricity Company of Ghana (ECG) to solve Ghana’s worsening energy crisis, Mr. Cudjoe said previous and the current governments failed to look into the future to add to the energy stock, hence the current situation.

“Sometimes when these discussions come up and someone assumes the problem can be fixed in a twinkle, I find it difficult to understand where that source of power will come from.

This is a challenge that has accumulated over the period and resolving it all of a sudden looks quite impossible.

It requires a carefully calculated methodology that will tackle the root-cause upwards else it shall compound for a future explosion which shall be very difficult to tackle.”

According to Mr. Cudjoe, the power sector is very “disjointed” and does not work in a synchronized manner with stakeholders such as the Volta River Authority (VRA), Electricity Company of Ghana (ECG) and this makes it difficult to achieve any significant results in the permanent expiration of the power crisis.



On Saturday 28th November 2015, the first of emergency power barges ordered by the Ghana government from Turkey, docked at the Tema Port, to supply about 250 megawatts of power to the national electricity grid.

This was after a few postponements of the deadline dates within the year. However, Ghanaians got more interested when a Norwegian newspaper VG, in a publication alleged that the Ghana government has been duped by a wanted criminal who was a signatory to the deal that produced the power barge.

According to the publication, Ghana signed off on $510 million deal for the facility, when it could have paid just about half, but the Power Ministry denied and argued that the cost of the facility was in indeed value for money.

However, in a total disagreement, the IMANI boss said; “… I’m not saying government is not doing anything, but it was essentially the wrong arrangement.

Nobody seems to have seen the Karpower deal… I’m beginning to think that any time we have embarked on such haphazard, speedy but very dodgy arrangements to fix a problem, it is actually in somebody’s interest to first of all let us be in such a situation… I want to believe that this ‘Dumsor’ of a thing was actually an organized plot to make us be in this poverty of power for a while and then a saint comes around to say, I’ve managed to fix it because I’ve brought in barges.”

He argued that the solution to the power crisis must be systematic and urged parliamentarians and the executive body to desist from passing similar bills under certificates of urgency for “humongous sums” under the pretext of solving the problem which they know cannot be solved within a short time.


The inefficiencies of the Electricity Company of Ghana were thought to be the reason for the massive load shedding, especially when about 25% of the total power produced for the country was either stolen or wasted.

As things stand now, majority of the problem really lies with generation of power to meet the demands of the country. However, Franklin Cudjoe believes that nonetheless, ECG is also very key factor to the current energy problems.

His organization, IMANI, is on record to have supported the privatization of the company to improve efficiency. “… Some people have suggested that the government also owes ECG, well I could blame successive governments for owing and not paying– something that has to change.

But ECG itself has received some significant amount of investment from the state and unfortunately don’t want to show their books. I know, on authority, that out of the over GHc3 billion ECG owes, government debt is about GHc800 million, this is as of about 5 months ago.

If we did a serious analysis of that debt, it will be cancelled out; if we quantify how much government seems to have pumped into ECG. We need to see the books and rest the argument about government’s indebtedness to ECG.”

Privatization of government’s parastatals have most times proven futile in the past or burdened the populace in other countries and that is the major panic in the minds of Ghanaian citizenries on privatizing ECG.


The whole world is in shock about the continuous slump in oil prices and its impact on global economies. The world’s biggest exporter of crude oil, Saudi Arabia cut down on fuel subsidies by about 50%, after it suffered a $98 billion dollar budget deficit in 2015 as result of the fall in crude oil prices.

Ghana is not a huge producer of crude oil and as a net importer of the commodity; the reduction is rather expected to be a welcoming news, according to some industry watchers.

However, government still depends heavily on oil revenues and when the oil prices dropped significantly by the middle of 2015, Ghana’s Finance Minister, Seth Terkper, returned to Parliament to review the oil revenue expectations for the year.

Based on the new revenue assumptions, total petroleum receipts for 2015 was estimated at GH¢1.5 billion (1.1 percent of GDP), compared with the 2015 Budget estimate of GH¢4.2 billion (3.1 percent of GDP).

The difference of GH¢2.7 billion is 64.4 percent lower than the 2015 Budget target. “We are not necessarily a promising oil producing country in a way that we should hinge all our fortunes on the oil sector because these were things most people had warned about long ago.

The barrels of oil to be produced was problematic coupled with a sector that was quite unpredictable and so its impacts on the budget were bound to happen.

So to even hinge your financial plan on the price of oil itself without necessarily being a major producer of oil was in itself a bit ‘foolhardy’ because it creates a false sense of hope and that false sense of hope causes spending anyhow.

This was very evident in the way we spent part of the petroleum revenues of which part went into the controversial bus branding – which was not a priority,” Mr. Cudjoe argued.According to him, it is not “smart” for Ghana to continuously hinge its development outcomes on the price of oil considering its production rate and the current challenges engulfing the industry globally.


2016 is an election year in Ghana and historically, successive governments have exhibited gross indiscipline in terms of spending- in some cases, stretching the budget deficits to unimaginable levels.

This usually takes a toll on the economy in later years. The government of Ghana, being hopeful of having the deficit situation of the country under control, has argued that it has reduced spending and that will be evident in the year 2016 spending.

Mr. Cudjoe in assessing the statement supposes the argument is rather baseless considering the elections that shall be holding in the later part of the year.


Every businessman in Ghana will testify that doing business in Ghana can be likened to fetching water with a basket; extremely difficult. This is simply because of the inflexible requirements that besiege the business environment.

Starting a business in Ghana as a foreign investor requires a capital of $250, 000 as well as other stiffened conditions which scares many investors.

All these and many more contribute to Ghana’s ranking 102 in terms of “starting a Business” of the Ease of Doing Business Index of the World Bank. IMANI boss, Mr. Cudjoe, said his team discovered that countries like Burundi, Sierra Leone and other “small” countries even do better than Ghana in terms of starting a business.

Ghana’s ranking in the World Bank’s Ease of Doing Business Index has worsened from 112 in 2015 to 114 in 2016 which makes the country’s business climate unattractive to foreign investors.

He cautioned government to be concerned about the drop because according to him, investors across the globe take critical look at such rankings to make business decisions on investments in such countries.

“Once International Investors watch these indices, they tend to advise their potential clients about the business environment of such countries on the possibilities of recouping their investments. Once they notice such rankings, they tend to focus on more reliable and dependable markets. For example, America has decided to increase its interest or policy rate, and that may be an attractive avenue for such an investor since he is sure of the right set of investments will be done. So all these indices send signals to the global market.”

Mr. Cudjoe believes there must be a proper competition policy in Ghana to allow businesses to thrive. This follows previous attempts by the Ghana government to restrict foreigners from engaging in retail trade in the various markets.

“The whole idea of competition is good and must be encourage. We need serious competition policy in this country otherwise we will keep on slumping on the doing business report. And it is not just when you automate your restriction process, it is also probably about access to financing and all these business laws and how to arbitrate when these issue come up”.

In the midst of the difficult economic conditions in the country, it is suggested that some businesses could consider mergers or cuts in employment.

To make Ghana’s business environment more attractive, government should decentralize its operations to have hands on approach to encourage small business owners and not to focus only on the prime businesses listed in the Ghana Club 100.


Government’s borrowing spree in the last two years domestically has had an adverse effect on Ghanaian businesses and crowded out many.

Business watchers and commentators have complained about government’s uncontrolled borrowing that is ‘destroying’ local businesses leading to massive unemployment. This situation has put some of these businesses in a very tight corner.

Accessing finances both locally and internationally has not been an easy condition to fulfil. “It’s difficult, but everything points to policy.

But not all businesses can position themselves to take advantage of international money”. Attracting foreign financial aid to boost private local businesses in the country requires proper positioning of such businesses and the kind of trade the firm engages that can guarantee the source of repayment.

This, therefore, makes international financing for local businesses a rock to be axed. To make accessing finance for local entrepreneurs very easy, there must be a certain direction from the government so that companies that have signed up to protocols under for instance the Economic Partnership Agreement (EPA) can get some level of support from the local banks.

“That is the only way the banks can grant loans to such companies considering government’s involvement in such businesses,” he noted.

All these, he suggested, are as a result of the policies government puts in place.


2015 was quite a difficult year globally and Africa had its own share of the pie. The Greek bankruptcy and bailout drama with its attendant problems for the European Union cannot be over-emphasized.

The Syrian crisis and subsequent migration to Europe and its related effects on Europe, the slump in oil prices and the teething effects on some global economies among others made 2015 quite a challenging year.

In the midst of all these Africa’s growth was optimistic despite its uncertainties. Africa is projected to be the next growth destination and investment hub of the global market but characterized with many uncertainties.

For Africa to take hold of this opportunity to lead the global market, it needs to reposition itself to become attractive enough to attract these investments.

However, Mr. Cudjoe believes that leadership on the continent has to change to facilitate Africa’s efforts to take advantage of its growth opportunities. “The narrative has to change.

Some of the bad governance that we see on the continent has to be changed. Bad leaders must be exited from power through a proper democratic election.

Some of the issues of corruption on the continent must be fought against and also security issues must be combated to abate the threat it poses on the continent. For instance, in some parts of the continent especially in Nigeria – obviously the Boko Haram effect is also not helping.

With bad governance, it affects even the policies that are made. If policies are not clear, it will be difficult for investors to come in and invest. So I think positioning ourselves, we need to be smarter in the way we run our public bureaucracies.”


The global economy is expected to rebound in 2016 says economic experts. The year 2015 had many challenges that confronted the global economy and as a result stunted its growth.

The big question, however, is whether things will change significantly in 2016, giving the efforts stakeholders have put in place to change things for the better.

In Franklin Cudjoe’s view, the global economic growth will largely be driven by America considering trifling challenges that confront Europe and Asia.

“I’m not sure the world will be safer; it will still be a bit turbulent,” he predicts.

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Business Interview

AGI@60: A Persistent Private Sector Voice



The AGI was established in 1958. Despite the country’s very young and unstable democracy, business leaders saw the need to have a stronger voice to represent their interest irrespective of who is in government.

As the adage goes: “Government has no business in running business”. This mean, businesses must focus on running business, creating jobs, paying taxes and sustaining economic growth. But to sustain business growth, businesses need a voice that cannot be suppressed.

Led by the iconic Dr Esther Ocloo, founder of Nkulenu Industries, the Association of Ghana Industries (AGI) was formed with only 10 local manufacturers with the initial name of Ghana Manufacturers Association. With time other manufacturers, including the multinationals, saw the essence of having a stronger production voice and within a couple of years, members soared.

In 1984, as though the membership was not enough, the association’s constitution was amended which opened to all registered companies engaged in manufacturing or the provision of services to the manufacturing sector and through associate memberships, other sectors including not-for-profit organisations have become members as well.

Such associate members include the Liquor Manufacturers’ Association of Ghana, Ghana Printers & Paper Converters’ Association, Furniture & Wood Products’ Association of Ghana, Ghana Timber Millers’ Organization, Advertising Association of Ghana, and others.

Today, the AGI now has over 1,500 members across over 20 sectors including advertising, agri-business, automotive & transportation services, beverages, business promotion & consultancy services, chemicals, construction, electricals & electronics, energy, exports, financial services, oil & gas, and food.

Others are hospitalities & tourism, information & communication technology, metals, building & construction products, pharmaceuticals & herbals, printing, stationery & packaging, rubber & plastics, toiletries & cosmetics, environmental and sanitation, garments, textiles and leather and wood processing.

With such a broad membership, the association has also increased its role in society beyond just the advocacy and advisory for policy and is now engaged in industrial sub-contracting and partnership, information gathering, analysis and dissemination, business plan preparation and development and trade promotion for members. Trade promotion, especially, has seen members, who hitherto would have struggled to enter particular markets are now operating on a global scale.

With the objective to contribute substantially to the growth and development of industries in Ghana and to create a supportive and competitive business climate, which will make Ghanaian companies internationally competitive, the AGI’s mission is to carry out proactive support services to the industrial sector with the view to contributing substantially to the growth and development of industry in Ghana.

Geographically, the AGI is physically represented all across the country with seven locations where members located in such areas report to the regional office and have their own sub groupings.

In an in-depth interview with Seth Twum-Akwaboah, Chief Executive Officer (CEO) of the AGI, issues such as relationship with government, industrial policy, local currency impact on businesses, power for operations, cost of credit, taxation, budget, trade, the AGI’s own Business Barometer and the future of the Association were extensively covered.


Relationship with Gov’t

Similar to any kind of relationship, Mr. Twum-Akwaboah, notes that there have been good and bad times. “The relationship with government has been good, but as every relationship it has challenges,” he says.

During the military regimes, he notes that, the AGI faced some of its most testing periods. While the AGI was pushing for and continues to push for a private sector led development, government was looking for state-led developments.

“At some point there was the tendency for the leadership of the association to be branded as anti-government. Most of the leaders of AGI were jailed or harassed by the military. Meanwhile all the AGI leaders wanted and continue to want is for the promotion of business at every point in time irrespective of who is leading the government,” he says.

Today, the AGI has become stronger for it and when it speaks through its regular statements, researches and the iconic Business Barometer, everyone listens. Since the commencement of the fourth republic, government has also recognised the significant role of the AGI in bringing in development to the country.

Significant roles played by the AGI now include making inputs in the national budget; by law and convention, the AGI is represented on several boards of public institutions, quasi government institutions and unions.

“If you want to influence policy, you do not wait till the end of year to make a statement. You need representation to influence policy at such levels. These are means of engaging. Due to our regional representatives, we engage policymakers such as regional ministers, district assemblies. There are some policies, at the local level, that have effect on businesses and industry,” he adds.

Despite the seeming strong power the AGI wields, Mr. Twum-Akwaboah, adds that not everything asked or requested of government is granted. Sometimes, he says, government blindsides the AGI with certain policies that could harm businesses especially in the areas of taxes, levies and laws.

“There are several government policies that have taken us by surprise and then we try to lobby for such policies to be reshaped to help businesses. We have such a regular working relationship with the government because it is needed to keep businesses growing,” he adds.

Budget Inputs

Touching on the AGI’s input on the annual and mid-year budget, Mr. Twum-Akwaboah, notes that the association presents inputs and afterwards holds a hearing with the finance ministry where individual AGI members speak about their views of the economy and what needs to be changed.

On the 2019 budget, the AGI presented a couple of inputs including the scrapping of the straight 5percent GETFund and NHIL on goods and services. “We thought its implementation was not the best and harmful to businesses because this is a cost happening across all levels of the value chain and has the potential to increase the cost of goods and services by as much as 20percent if the distribution chain is up to four,” he notes.

For big manufacturers with three distribution levels, he explains, the manufacturer will pass on the 5percent to the key distributor, who will now add another 5percent and move it to the wholesaler, who adds another 5percent to the retailer, who then adds 5percent to the consumer’s product.

“That is the cascading effect and will make the price of goods and services of local manufacturers very expensive,” he says, noting that for the importers, they just pay a flat rate of 3percent.

“For an agenda that seeks to promote local industries, this tax is inimical to local businesses. We engaged the minister and the tax policy unit with other stakeholders and we expected the 2019 budget to take it into consideration but it was not captured. We will continue to engage the minister,” he says.

But overall, the CEO of the AGI lauded the 2019 budget, describing it as “positive” but stressed that what matters is implementation. “A lot of the intentions are good including the making of US$1billion for industrial initiative, a stimulus package for struggling industries and industrial zones are good,” he says.


Industrial Policy Stutters

Government, in 2011, launched a comprehensive industrial policy to place industry at the centre of development.

The policy, which was started during President John Kufuor’s regime and completed when President Atta-Mills was in power, is a set of specific policy instruments and measures to be applied to increase access of the country’s manufacturing sector to competitive factors of production to enhance productivity, efficiency and competitiveness.

Key development objectives of the policy include expansion of productive employment in the manufacturing sector, promotion of agro-based industrial development and ensure spatial distribution of industries to achieve reduction in poverty and income inequalities. The implementation of the policy was expected to be done through an Industrial Sector Support Programme, which are time-bound interventions to speed up the rate of industrialization over a period of five-years.

The AGI, as the lead industry advocate, played a critical role in shaping the policy but since the launch of the policy nothing has come out of it and despite President Nana Akufo-Addo’s industrial agenda, led by the One District One Factory (1D1F) programme, the policy is still on the shelves.

When asked what is the current state of the policy, Mr. Twum-Akwaboah bluntly stated: “I do not think we have an industrial policy.” He notes that there was one, which was a good one, but implementation was poor and that led to the collapse of the policy.

To him, Ghana needs to incorporate the relevant aspects of the current government’s industrial agenda into the old policy and draw up a revised industrial policy and follow through. “Having a good policy and a plan is better than working on adhoc basis,” he says.

Does 1D1F fits into this policy?

He explains that what needs to be done for 1D1F to succeed is to allow the systems to work including using the 20percent of the District Assembly Common Fund, which is meant for district industrialization by law, to be used for its intended purpose.

“It was envisaged that, at the district level, you need industries to employ people and curtail rural-urban migration. That is why 20percent of the assembly’s common fund is dedicated to industrialization,” he says.

1D1F fits into the industrial policy because it envisaged the spreading of industries across the country and include locational tax incentives to push businesses into the other parts of the country and every location with specific raw materials. “That is an indication that we are encouraging industries,” he says.

But along the line, he notes, the AGI and businesses realized that such incentives were not enough due to the lack of markets, technology and infrastructure for businesses to thrive in such remote parts of the country.

1D1F requires patience

Asked about whether new members have joined the AGI as a result of 1D1F, Mr. Twum Akwaboah, advised that Ghanaians must be patient because 1D1F businesses will not just spring up overnight, especially when it is private-sector led.

Establishing an industry doesn’t happen overnight, especially sustainable private-sector led businesses. These businesses must be commercially viable, technically feasible and financially possible to get funding. To go through the process of acquiring technology, market assessment, right skills and have a proper corporate governance system does not happen overnight. The expectation that once you start, industries will spring overnight will not happen,” he says.

Secondly, he advised that one needs a very good funding arrangement to get the factories running, meanwhile, right from the beginning there was no funding for the programme.

To him, even though Finance Minister, Ken Ofori-Atta has made a pledge to mobilize US$1billion from various funding sources for small, medium and large scale enterprises to accelerate the industrial transformation agenda including the 1D1F programme, government should make a certain percentage for equity funding.

The AGI, he notes, tried to arrange funding to support the 1D1F, but he expects businesses interested in the venture to have some counterpart funding to attract investors. “We will love that the pace of the establishment of the 1D1F will be hastened so that we can all tell what is happening,” he adds.


The Business Barometer

One of the products of the AGI that any government is weary about is its Business Barometer. The Barometer is the true measure of business confidence in Ghana, spanning a period of over 11 years. It has consistently captured the views of 500 CEOs sampled from various sub-sectors of the Ghanaian economy.

Administered quarterly and largely through face-face interviews, the barometer touches several areas of economic activity across the 10 regions to ensure completeness of coverage. Assertions on the state of the business climate for the next quarter permit a ±5percent margin of error.

Often the Business Confidence index lies above or below the 100 base index with findings consistent with developments in the economy.

Starting as a Business Climate Survey, the survey was supported by the GIZ, a German development agency, as an annual report but when surveys were published which included key challenges faced by industry and businesses that were biting and needed quick interventions, the annual nature of it rendered it dud.

“We therefore converted it to a more frequent survey and allowed government and other stakeholders to quickly react to the needs of business,” he says, adding that it has helped a great deal in checking the policies being implemented by government in the short term.


The Thorny Issue of Power for Businesses

It is common knowledge that the AGI, for the best part of three decades, has been at the forefront of the campaign to not just reduce the cost of electricity or power for businesses, especially manufacturers to operate, but to overhaul the power sector to allow industries pay fairer prices which will allow them to compete especially against imports.

Earlier last year, government significantly reduced tariffs on electricity to as much as 25percent for big businesses but in the view of the AGI, the structure of the tariff regime is the problem not necessarily how much the reduction is.

Due to its squabbles with government over the cost of power, many believe the AGI is looking to run aground the power sector but Mr. Twum Akwaboah notes that that is not the case because power sector players such as the Volta River Authority (VRA), Electricity Company of Ghana (ECG) and Ghana Grid Company (GRIDCo) are all members of the association.

“How will we wish that our own members’ businesses collapse? We actually advocate for them as well. Power is a necessary input for production. What we have been asking for is simple: if you want Ghanaian industries to grow and be productive, they must have efficient power that can be given at competitive price,” he says.

The business principle of power

Apart from industry subsidizing residential users in Ghana, virtually the only country that still does this in the world, AGI’s main concern is the business principle of power being pursued by government which is killing industries.

“An instance is a company in Tema, with one metre, that pays GH¢3million in electricity bills per month. This business does not need a step down transformer because of the high volume of consumption and also does not need a lot of cables and poles to access power. To earn the same amount of GH¢3million from residential users, you need a whole community with several step down transformers, kilometres of cables and poles, hundreds of metres, and more manpower, all of which come at a cost.

That means it costs the service provider more to earn GH¢3million from residential communities than in industry for the same quantity or voltage of power. Also, the bigger the spread, the more leakages or waste occur and you are at a higher risk of illegal connections and other vices. Yet, the business, where the cost of service is cheaper, is paying more than residence where the cost of service is higher,” he says.

Ghana’s cost of producing power is too high

Another challenge the AGI has, when it comes to power, is the cost per kilowatt hour. In highly industrialised economies such as China and India, the cost per kilowatt hour hovers between 3 to 6cents but in the case of Ghana, it is near 20cents per kilowatt hour.

To Mr. Twum-Akwaboah, the Ghanaian industry cannot compete globally if it pays nearly four times the price in China and India, which are major industrial hubs. “It is important that we find ways and means to drive down the cost of electricity. We need to work hard, government and industry, because everybody is suffering when the price of electricity is high,” he adds.


Touching briefly on the effect of the three-year power rationing, popularly called ‘dumsor’, he described its impact on industry as “devastating”.

To avert another power rationing and sustainably provide cheaper power for homes and businesses, he explains that what is needed is planning. “There is an eight-year cycle where the hydro source becomes inadequate and so you plan to get other sources in. unfortunately we did not plan in advance and that is what happened. In trying to solve it too, we signed countless Independent Power Purchasing (IPP) agreements that are not good for us.”

With the population growing, which is leading to sophisticated demands, the need for more energy is growing and so with efficient planning and regular investment in the sector, supply can stay ahead of demand so that Ghana will no longer experience the energy crisis we experienced between 2013 and 2015.

Renewables is the way forward

The AGI believes that with the advancement of technology in renewables, businesses and homes as well as government should aggressively consider the renewable option. “A few years ago it was very expensive to look into renewables but today the cost per production is getting cheaper and so government’s move in that direction is highly encouraged.”

With environmental protection in the face of climate change on the minds of the AGI, what the association wants to see is a flexible regulatory environment that will encourage a lot of private sector players into the space. “If you have a system that encourages the initial investment, then we can immensely benefit from renewables.”


Cost of credit, AGI’s bank and EXIM

With key macroeconomic indicators such as inflation, policy rate and Treasury Bill rate falling, AGI believes this should quickly translate into lower lending rates so that businesses can comfortably borrow and expand. “We welcome the consistent fall and we hope it continues to fall. Much as we want lending rates to fall quickly, we appreciate the gradual drops.”

The AGI, about four years ago, was pushing for the establishment of its own bank but not a word has been heard for the past year and a half. To Mr. Twum-Akwaboah, the establishment of the bank looked very good at the time it was being suggested but the economic climate and regulation makes it slightly challenging to run the bank in a manner that will be different from others.

“We wanted to create a scheme that will solve a major problem by providing medium to long term capital for industry. A lot of the banks today are not providing that, not even NIB and ADB, the development banks. With a universal banking license, you will have no choice but go by certain standards and that will make you no different from the others,” he says.

The AGI has repurposed the institution and has set up a fund, registered with the Securities and Exchange Commission (SEC) that can draw capital from government, development finance institutions and banks, and then AGI members can access this fund at much lower rates on medium to long term basis.

The ultimate aim, he explains, is to grow the fund to a level that AGI can secure a specialized license from the Bank of Ghana to operate as a specialized development bank.

Touching on the impact of recently established EXIM Bank, he notes that the AGI is very happy about its establishment but cautioned the business community to have patience for the institution since it is still early days yet.

“EXIM needs bigger capital and just the money coming from Import Levy is not enough. The whole idea of establishing an EXIM Bank is good because it can leverage its balance sheet to draw in capital from other institutions including other EXIM banks across the globe and create a bigger portfolio of funds and those moves do not happen in a day. We are monitoring and we can only be cautiously optimistic.”


Taxes and China’s US$2bn package

As businesses, paying taxes is unavoidable as taxes go a long way to develop economies and so with that the AGI wholeheartedly backs the government in pushing everyone to pay taxes. But AGI’s challenge is the implementation of some tax policies, especially the tax stamp, the frequent changing of the tax regime and the introduction of some new taxes.

The AGI, according to its CEO, has complained to government about some businesses that avoid taxes through under-invoicing and under-valuation and that led to the creation of a task force to monitor movements at the ports.

On the controversial tax stamp policy, which was welcomed by the AGI, the views of local manufacturers were not taken into account. The stamps, in the current format, will slow down high speed lines, especially for big beverage manufacturers such as Accra Breweries Ltd, Kasapreko, Cocacola, and Guinness Ghana Breweries Ltd.

But at the end, government and businesses have reached a compromise and now importers and local manufacturers are affixing the stamps and the Ghana Revenue Authority (GRA) is monitoring the situation aggressively. The textiles sector is the latest to start affixing the stamps, which is highly welcomed by players.

On the ECOWAS Common External Tariff, the AGI is still working on a comprehensive study to identify benefits and challenges but Mr. Twum-Akwaboah believes that being part of a common market is good for local businesses since the ECOWAS region is bigger than Ghana. “We just have to monitor how it is positively or negatively affecting our businesses.”

China’s US$2bn

The AGI truly secured a US$2billion credit facility with the China National Building Materials Company (CNBM) and so far several businesses have benefited. The whole idea, the AGI notes, is to use this to support the 1D1F.

The arrangement is such that businesses do not get direct financing but request for equipment when setting up factories and then repayment can be done till up to 10 years. The only challenges were guarantees from banks or government backing it with a sovereign guarantee but government is not prepared to do that.

So far, EXIM Bank and a few other banks have guaranteed projects for about 10 companies and construction is underway for some of the factories.


Future of AGI

For 60 years, AGI has become a stronger institution but the future is bigger and broader than one can imagine. Starting as a manufacturers association, it has moved beyond to encapsulate businesses. “As long as we continue to promote industry then AGI has a future but if we kill industry then there is no future for AGI. It is as simple as that.”

To Mr. Twum-Akwaboah, the current government has an eye for industry and a look at the 2019 budget leans heavily towards industry and initiatives such as 1D1F are industry focused and then there is the Ministry of Trade’s 10-point agenda. “As long as government itself has industry at heart, then AGI can only be smiling into the future and our core interest is to see members’ businesses grow.”

Therefore, the AGI will not relent in its efforts to engage with government to formulate business-friendly policies to see businesses grow. So far, the trend, he notes, is that global actions such as the ECOWAS Common Tariff and the Continental Free Trade Agreement are signs that the future looks promising for Ghana’s businesses.

“I am very positive that the future looks good but we need to advocate for the right policies and we need to have good entrepreneurs that are forward-thinking, committed and dedicated to doing businesses in a transparent manner,” he says.


Advice to members

To the members of AGI, over 1,500 of them including small, medium and large businesses, the association’s CEO believes that internally, implementing best corporate governance systems, good management style, recruiting the right talent, making sure efficiency is key and developing financial modules to survive during times of crisis, and prudent resource management will see businesses grow.

As the business grows, Mr. Twum-Akwaboah notes that there is the need for professional engagement. He further stresses “business leaders should not shy away from bringing in such help to develop and sustain their businesses. To go beyond generations, succession planning is key”.

For external factors such as inflation, interest rates, policies from government are not in members’ domain and so they should not be bothered about such actions. “Leave that to the association to handle.”

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