Any form of support from the International Monetary Fund (IMF) will only provide temporary relief to the current economic challenges, the Ghana National Chamber of Commerce and Industry (GNCCI) has said – urging government to focus on homegrown solutions while reducing the highly controversial electronic levy.
Government is seeking a balance of payment support from the Bretton Woods institution to deal with its mounting economic crisis. However, GNCCI believes that the Fund’s assistance will not provide a permanent solution – just like previous 16 times that the country has sought its support.
Rather, it is urging government to be more inward in its approach to overcoming the current economic challenges by focusing more on home-grown solutions: such as value addition, production of goods, optimising local content policies and revenue mobilisation.
Others like operationalisation of the Tax Exemption Act that was passed by Parliament last month and the Property Tax bill, among others, will diversify and expand revenue sources. It said these decisions, although tough, if taken will provide a more enduring solution to address falling revenues, currency depreciation and inflation while boosting the capacity of manufacturers.
“The cedi’s rapid depreciation against major foreign currencies, high cost of fuel, high inflation and high policy rate are heightening the cost of doing business in the country. Moreso, rising public debt, poor domestic revenue performance, balance of payment problems, high government expenditure, and lack of fiscal discipline resulting in credit rating downgrade and loss of external financing is worsening the country’s economic outlook,” said its president, Clement Osei-Amoako.
He spoke in Accra during a capacity training for small and medium scale enterprises (SMEs), organised by GNCCI and Development Bank Ghana on the theme ‘Empowering SMEs with the requisite business skills for sustainable growth and resilience’.
Reduce e-levy
To ensure that the E-levy achieves its objective, Mr. Osei-Amoako called on government for a downward revision in the rate of 1.5 percent to stagger it within the bands of 0.5 percent to 1.0 percent. “In our analysis, this will not stifle the growth and sustainability of businesses in the country,” Mr. Osei-Amoako said.
He added: “We urge government to provide more support to value addition, local content optimisation, export development, trading of domestic products and services, and efficient competition laws which are sustainable tools needed to manage exchange rate and inflation stability and achieve macroeconomic prudence”.
Michael Mensah-Baah, Deputy Chief Executive Officer of DBG, indicated that the Bank has been designed to help relieve the bottlenecks which have hindered the availability of long-term, competitively priced loans to small and medium-sized enterprises in Ghana.
According to him, small business owners often do not have access to the long-term capital they need to grow and are often seen as too risky by banks. “Addressing the lack of long-term financing that drives the kinds of investment that will lead to sustainable growth is a gap that must be addressed,” he said.
DBG, he explains, employs a wholesale banking model whereby it provides funding to eligible financial institutions to on-lend to Ghanaian businesses in targetted industry sectors.
So far, he said, DBG has identified agribusiness, manufacturing, ICT and high-value services as catalytic sectors of the economy to focus on. “Our business model allows us to leverage the networks and existing infrastructure of banks and financial institutions that partner with us to provide business advisory services and training in addition to financing,” Mr. Mensah-Baah further stated.
Capacity training
The event marked the formal launch of the capacity-building initiative’s first phase, which aims to develop and reinforce the business skills of Ghana’s private sector to improve their commercial operations and enable them to remain competitive.
In all, five workshops will be organised in five locations – Accra, Koforidua, Tarkwa, Takoradi and Cape Coast – to help businesses scale-up operations as well as adopt operating models which better position them to access loans from DBG’s participating financial institutions. To achieve this goal, the programme focuses on improving access to finance and provision of technical support for SMEs and will be rolled-out on the Ghana Integrated Financial Ecosystem (GIFE) digital platform.
A total of 500 SMEs – 100 per location, derived from baseline data that covers businesses by sector, region and ownership by women-led/youth, will be trained in use of the GIFE digital platform.
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Commenting on the initiative, Mr. Mensah-Baah said DBG views partnerships as critical to the way it executes its work. “We are very grateful to GNCCI for organising this capacity-building programme to develop and strengthen the soft and hard skills of its SME members to stay competitive, build resilience and grow their businesses sustainably.”
Meanwhile, for Mr. Osei-Amoako, GNCCI’s contributions to growth and development of the Ghanaian private sector cannot be overemphasised. Accordingly, he added, the GNCCI has yet again taken a bold initiative to collaborate with DBG to, first and foremost, empower its member firms with the requisite business skills to scale-up their business operations and enhance their attractiveness to access long-term capital.
