- Perception of government support for trade significantly lower
- Firms less optimistic about future prospects for importing
- Businesses looking forward to an IMF bail-out
Optimism among Ghanaian businesses has reached a significantly low level than it was six months ago, the Africa Trade Barometer (ATB) report by Standard Bank Africa has revealed.
The report states that the main contributing factor to this decline in confidence is the high prices on products and the perception of a poor-performing economy linked to the poor-performing Ghanaian cedi, which had lost half of its value in the past year. In addition, the perception of the government’s support of trade is also significantly lower.
Ghana ranks 2nd on the ATB and QTB, but last on STB. The ATB report provides reliable data and insights on African markets gathered from 2554 firms representing small, big and corporate businesses across all 10 economies during August and September 2022.
Per the report, Ghanaian firms have seen a significant decline in business confidence as a function of economic performance. “The divergence in these rankings and the intervals at which they’re published (bi-annually) speaks directly to the value the Barometer provides in reflecting macro data as well as changing patterns that indicate flux.”
“Over the past six months, Ghanaian firms have shown a downward trend in business confidence, driven mainly by the corporate segment. Business confidence is driven by perceptions of the economy, with firms who believe that the economy is stable being more optimistic, while those who perceive the economy to be in a poor state are less optimistic,” the report said.
“While industries are recovering from the effects of the pandemic, most believe that turnover will increase, but there is still concern about the long-term impact of the regulations imposed at the time of the pandemic and the aftermath of COVID-19,” it added.
Ghana’s currency, in the second half of 2022, declined significantly, making it the worst-performing worldwide. While the oil and gas sector’s strength doesn’t necessarily benefit other industries, the report notes that businesses anticipate an IMF bail-out in 2023, which could provide stability and economic discipline. “This is the environment that businesses are looking forward to even as the local economy currently falters.”
The report further indicates that Ghana has experienced a significant decline in its currency over the past few months, becoming the worst-performing in the world. While the sectoral strength in oil and gas does not necessarily translate into benefits for its other sectors, businesses are potentially looking forward to an IMF bail-out scheduled for 2023, bringing with it stability and economic discipline. This is the environment that businesses are looking forward to, even as the local economy currently falters.
The report also indicates that there is a slight optimism about future prospects for exporting among Ghanaian firms, but Ghanaian firms have become less-optimistic about future prospects for importing. However, there is a slight increase in domestic buying among importers, potentially a growth driver for the country’s economy.
“Fewer Ghanaian businesses are interested in engaging in cross-border trade in the future, and only 29 percent of firms are involved in foreign trading import goods, mainly from international wholesalers, with a perception that imports from Nigeria will increase in the next two years,” portion of the report read. “The perception of government support of trade is significantly lower among Ghanaian firms, and high import/export tax rates contribute to the belief that foreign trading is difficult.”
In view of this, firms are expecting the government to provide some relief on business tax, and lower customs duties.
Additionally, access to credit has become tougher for firms in Ghana, which is a stumbling block to stimulating the local economy.
The Africa Trade Barometer report is aimed at providing a source of reliable data and insights on African markets and economies for businesses and entrepreneurs as well as businesspeople, students, governments, NGOs, and investors considering the continent. Qualitative and quantitative intelligence was gathered from 2554 firms during August and September 2022 for the second issue, representing small, big and corporate businesses across all 10 economies.
The objective of the Standard Bank Africa Trade Barometer is to provide dynamic and insightful understanding of trade in Africa. This ambitious project was conceived with the intent of creating Africa’s leading trade index to address the information vacuum in terms of the absence of reliable African trade data, and to support and enable the growth of intra-Africa trade.
“When we set out to construct the inaugural African Trade Barometer, we initiated a substantial effort to conduct in-person surveys with firms of all sizes – over 2550 in total – across the 10 economies. This qualitative research informs the Survey Trade Barometer (STB) ranking. Aggregating this qualitative STB data with the quantitative Trade Barometer – ranking data obtained from third-party sources, including the World Bank, the International Trade Centre, and local Central Banks – we’re able to arrive at the African Trade Barometer (Traceability Index) that ranks all 10 countries from first to last. It was essential for us to ensure that the findings would be relevant and reflective of real-life trading conditions as experienced by African businesses on the ground,” the bank highlighted.