Business confidence dropped from 103.5 points in Quarter Two (Q2) 2019 to 97.8 points in Quarter Three (Q3) as expressed by captains of industry.
According to the Assosciation of Ghana Industries’ (AGI) Business Barometer Indicator (BBI), the drop in the business confidence was due to some policies introduced in the 2019 Mid-Year Budget Review.
These include, but no limited to increase in energy sector levies for both diesel/petrol and Liquified Petroleum Gas (LPG), Communications Service Tax increased by 50% and announcement by the PURC to increase electricity tariff by 11.7%.
Also, the report said the effect of the exchange rate could not be downplayed as all these challenges contribute to high operational expenses.
Beyond Ghana winning the bid to host the AfCFTA Secretariat, the report said there is the need to deepen the discussions on how to make local businesses more competitive.
The top five challenges identified in Q3 were electricity tariff, the value of the cedi, cost of raw materials, the current tax regime and delayed payments.
Overall Perception of Business Performance
The report said the business environment seemed staled during the period under review. This is consistent with the drop in in confidence index.
50% of business executives asked to evaluate their business performance in Q3 attested that their business environment remained the same, while 22% said their business performance worsened during Q3.
However, the 28% of the respondents reported a better performance than the previous quarter.
Subsequently, when the business executives were asked about the prospects of the ensuing quarter, a significant 53% were more optimistic of the next quarter than they were of Q3, 2019. This is a result of a relatively stable macroeconomic environment, coupled with the euphoria surrounding the Christmas festivities.
However, 39% of the business operators were less optimistic about the business environment and do not see any change in their business performance in Q4.
The BBI is an AGI proprietary tool that measures the level of confidence in the business environment and predict short-term business trends. It is based on the business community’s assessment of current economic conditions and perceptions and it simply expresses the state of the business climate as an index with 100 as the base index.
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