We are under pressure – AGI
The Association of Ghana Industries (AGI) has faulted the government for not diagnosing the challenges bedeviling the economy before prescribing long-term solutions.
AGI President, Nana Owusu Afari, said the country’s industrial base is under-capitalised and can hardly borrow at the prevailing lending rate to grow their businesses.
The interest rates are currently averaging around 24 per cent and Nana Afari thinks that is disingenuous to the growth of the private sector.
“Our industries are under pressure from rapidly emerging global markets which manufacture at lower cost than we do”, adding that “I am convinced that our economy will see significant growth if government gives additional support to the private sector while making manufacturing viable enough to attract Foreign Direct Investments (FDIs)”.
He was speaking at the launch of the Foreign Private Capital Flows (FPCF) Survey 2013 and Dissemination Workshop in Accra, organised by the Bank of Ghana.
The AGI boss is even more worried that the country has over focused on bringing inflation down using the inflation targeting model. This he said, has not helped because when inflation was at a single digit, interest rate never came down.
“We all thought the macroeconomic policies will help stabilise the cedis but this did not happen as the cedis depreciated by about 20 per cent last year. Our import bill continues to exceed our export revenue. From the private sector perspective, we think we have not seriously researched to find out the underlying problems facing the economy,” he said.
According to him, the AGI has consistently advocated for evolving policies for value-addition to our raw materials that we continue to export in their raw state. He said the association also consistently asked government to institute the necessary production incentives to scale up manufacturing industry’s contribution to Gross Domestic Product (GDP).
But the Minister of Finance, Mr Seth Terkper assured that government would also continue to engage the business sector to address these problems.
The Deputy Governor of BoG, Mr Millison Narh, said it was time Ghana positioned itself to attract the huge investment funds looking for safe havens to migrate to.
He said our traditional dependence on commodity exports for foreign exchange continues to face challenges, the commencement of crude oil production notwithstanding. Also, resources from our traditional donor partners are also drying up due to both our accession to lower middle income status and the economic problems in the donor countries themselves.
According to the FPCF survey findings, the stock trade of credit increased to GH¢338.12 million in 2011 from GH¢204.96 million in 2010. The overall increase in foreign borrowing was mainly due to disbursements of long-term loans of GH¢473.77 million and short-term trade credit of GH¢149.90 million.
Most of the disbursements were received by entities in the information and communication, finance and insurance and manufacturing sectors. The three sectors jointly accounted for 81.5 per cent of the total disbursements received for 2011.
Portfolio investment comprise of total equity based on the value of individuals shareholding of less than 10 per cent.
The stocks of portfolio investments were GH¢74.33 million and GH¢77.98 million in 2010 and 2011 respectively. The finance and insurance sector attracted investments from the United States, United Kingdom, Netherlands and Nigeria whilst the Manufacturing sector attracted investments from the United States and Mauritius.
By Ama Amankwa Baafi/Graphic Business/Ghana