The IEA Presents Study on “Advancing the Cause for a Favourable Business Environment through Advocacy”

06-09-2019

The IEA Presents Study on “Advancing the Cause for a Favourable Business Environment through Advocacy”

Yesterday, the Institute of Economic Affairs presented the outcomes of a survey during a roundtable discussion on “Advancing the Cause for a Favourable Business Environment through Advocacy”. The aim of the study was to identify key constraints of Ghanaian businesses and the effect on their confidence and performance, while making recommendations to address these constraints. The survey was followed-up by a series of activity programmes to connect the results to policymakers and other stakeholder. The BUSAC Fund and its development partners (DANIDA, USAID and European Union) supported IEA to carry out this project.

Survey on Business Constraints and their Effect on Confidence and Performance

The survey was carried out in February 2018, a year into the administration of the NPP Government. It was based on 200 randomly-selected businesses in the Greater Accra, Ashanti, Western and Eastern region. The businesses were engaged in activities in the three sectors of the economy: agriculture, industry and services.

Fifteen constraints were used for the survey, informed by the theoretical and empirical literature, and businesses were given the option to pick their topmost one. The top ten constraints that emerged from the survey were:

  1. High cost of raw materials;
  2. High cost of credit;
  3. Low/insufficient domestic demand;
  4. High utility charges;
  5. Unstable exchange rate;
  6. High government taxes and charges;
  7. Excessive influx of imports;
  8. Unfavourable regulatory environment;
  9. Unreliable electricity supply; and
  10. Difficulty in obtaining licenses or permits

The ranking of constraints in this particular list reflects long-standing fundamental challenges to Ghanaian businesses along with peculiar problems that may have existed at the time of the survey. Follow-up question tried to find out how these constraints have affected the confidence and performance of businesses, which are described in the full report.

Policy recommendations

The IEA made several policy recommendations based on the survey, such as:

  • High cost of raw materials: Introduce policies to support production of raw materials and other inputs domestically to feed businesses.
  • High cost of credit: Adopt a multifaceted approach involving policies to improve operational and management efficiencies of banks, reduce lending risks, reinforce regulation and ensure durable macroeconomic stability.
  • Low/insufficient domestic demand: Improve the quality of domestic goods; educate and sensitize consumers to utilize made-in-Ghana goods; introduce trade policy interventions to avoid “dumping” of imports on Ghana.

Want to read the full report and get to know more about de advocacy activities? Read the full report here: http://ieagh.org/wp-content/uploads/2019/08/FINAL-FINAL-BOOK-2.pdf

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