A survey report by Deloitte Ghana has revealed that high inflation and currency fluctuations are the major concerns for domestic producers.
In response to what players foresee as being impediments to the growth of industry, 68 percent of manufacturers identified inflation and currency fluctuation as the primary barriers to growth, Deloitte said.
The audit, tax and advisory services firm’s study further established that cost of capital and lack of infrastructure are stifling growth of producers. Similarly, government’s aggressive domestic revenue mobilisation drive is seen as causing more damage to the local business space.
Meanwhile, the ‘global economic downturn’, which government mostly pinpoints as the main cause of the current economic crises, only received a 34 percent mention in the multiple entries’ response, Deloitte said.
Against this backdrop, Deloitte noted industry players believe that growth will be boosted by lowering value addition tax (VAT) and increasing private sector participation while abolishing some nuisance taxes.
The key expectations of industry include tax incentives, an increase in public capex, and simplification of capital gains tax structure as well as accelerated credit facilities.
In Deloitte’s view, manufacturers want government to understand their expectations about the economy, especially given impacts from the domestic debt exchange programme (DDEP) – introduced as a prior action for approval of the International Monetary Fund (IMF) programme – on the productive sector.
Mid-year budget review
Though producers are very pessimistic about government’s ability to introduce policies that will drive industry growth, they believe introducing tax-waivers and green financing incentives will propel Ghana toward carbon-neutral commitments.
About 73 percent of respondents indicated that tax incentives and subsidies to promote a green economy would be of great support, while some 46 percent also want government to devise innovative green instruments for financing.
Environmental, social and governance (ESG) investing is used to screen investments based on corporate policies and encourage companies to act responsibly. As the country is committed to climate change and global warming mitigation initiatives, government’s ability to incentivise private financing and private-public partnership (PPP) is strongly recommended.
Extractive, services, agriculture to drive 2nd quarter economic growth
Again, a high number of respondents identified the extractive, services and agriculture sectors as those likely to drive growth in the second half of 2023.
About 69 percent believe that without a change in current tax policies, the services sector will be the leading sector to drive growth; followed by the extractive and agriculture sectors.
In order to boost the industry’s productivity and increase exports, the respondent said: “Credit availability and reduced Customs fees will increase industry exports. For instance, reviewing capital allowance deduction for saloons and certain vehicles upward; abolishing financial sector recovery levies; and removing minimum chargeable income regime”.
Partner-Financial Advisory, Deloitte Ghana, Yaw Appiah Lartey – in a presentation of the report at the pre-mid-year budget discussion on the theme ‘Positioning for sustainable recovery; Ghana’s economic outlook post-IMF deal’ – mentioned that industry is really suffering to continue in business; hence, the strategy adopted by many is to prioritise survival.