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Businesses in Ghana Seek Urgent Reforms to Boost Growth and Competitiveness, UKGCC Report

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Uk Ghana Chamber Of Commerce
UK-Ghana Chamber of Commerce (UKGCC)

Businesses in Ghana remain cautiously optimistic about future growth, but a new report from the UK-Ghana Chamber of Commerce (UKGCC) highlights significant hurdles that must be addressed to unlock the country’s full economic potential.

The 2024 UKGCC Business Environment and Competitiveness Survey (BECS) reveals that while companies are increasingly embracing technology and exploring market expansion, they are concerned about several key challenges hindering their progress.

The report, which surveyed 725 businesses across a wide range of industries, pointed to taxation policy, the high cost of telecommunications, bureaucratic government processes, and an outdated regulatory framework as some of the most pressing issues for businesses in the country. These concerns, particularly the rising costs of telecom services and the complexity of regulatory requirements, have emerged as critical areas that need immediate government action.

“For the first time, the cost of telecoms and the regulatory framework appeared on the list of poorly-rated business components, signalling a growing need for reform,” the report noted. While businesses still regard the availability of telecom facilities positively, this rating has declined significantly from 36 percent in 2023 to just 20 percent in 2024, signaling a worrying trend.

Despite these challenges, businesses have generally rated the availability of power, labour, water, and logistics partners more positively, although the affordability of these resources remains a concern. The report underscores that while improvements have been made, businesses are still grappling with the high cost of production—especially in key sectors like manufacturing—where expenses related to raw materials, machinery, and energy continue to hinder operational growth.

The adoption of technology, especially in the manufacturing, agriculture, and services sectors, is one of the few bright spots. Many businesses are embracing digital tools to streamline operations and improve productivity. Yet, the report also noted that some companies, particularly in the agricultural sector, are still reliant on outdated systems, suggesting there is room for further technological advancement.

However, the optimism is tempered by ongoing issues with governance, particularly corruption and bureaucratic delays. Despite recent reforms aimed at simplifying business processes, such as tax filing and registration, these governance issues remain pervasive, eroding investor confidence and undermining the predictability of Ghana’s business environment.

“Corruption has consistently been one of the most declined components over the past four years. This ongoing issue continues to negatively impact the business climate,” the report states. Respondents are calling for a more transparent and consistent regulatory environment to create an atmosphere conducive to both local and foreign investment.

The high cost of doing business remains a significant challenge, with inflation, exchange rate volatility, and rising inflation contributing to the overall cost of production. Tax policies are seen as a major driver of operational costs, especially in the context of Ghana’s fluctuating currency and the impact of inflation on labour affordability.

Access to capital remains another critical issue, particularly for small and medium-sized enterprises (SMEs) that make up a significant portion of Ghana’s private sector. The survey indicates that high interest rates, coupled with stringent lending conditions from banks, are making it difficult for SMEs to secure the funding they need to grow. Respondents called for government intervention to ease these financial burdens, recommending tax incentives and flexible financing options to help businesses thrive.

AfCFTA—The African Continental Free Trade Area—presents both opportunities and challenges for businesses in Ghana. While many companies recognize the potential for greater market access and increased exports, there are concerns about preparedness, particularly among SMEs. To fully capitalize on the opportunities presented by AfCFTA, businesses are calling for more government support in areas like investment security, tax cuts, regulatory reform, and quicker approval processes.

“To make AfCFTA a reality, African governments must prioritize safety, security, transparency, and effective regulation to facilitate smooth intra-African trade,” the report emphasized.

The 2024 survey reveals a deepening call for greater collaboration between government and businesses to address the existing challenges. There is a strong belief among respondents that by fostering a more inclusive, transparent, and supportive business environment, Ghana can enhance its global competitiveness and stimulate sustainable economic growth.

Commenting on the report, Vish Ashiagbor, Country Senior Partner of PwC, the consultancy firm behind the report, stressed the importance of pragmatic reforms. “Urgent interventions are needed to reduce business challenges, create a stable regulatory environment, and enhance transparency. The government should review its revenue mobilization strategy to avoid further burdening the business community,” he said.

The Executive Director of UKGCC, Adjoba Kyiamah, also called for reforms to improve access to affordable financing and incentivize energy-efficient technologies. She added, “Addressing these operational costs is crucial for enabling businesses to expand and drive innovation.”

UKGCC Executive Council Chairman Anthony Pile MBE echoed similar sentiments, highlighting the importance of creating a secure environment for businesses to thrive. “Strategic investments in community policing, improved street lighting, and increased security personnel can reduce crime and ensure a stable environment for businesses,” he stated.

In conclusion, the UKGCC report calls on the Ghanaian government to take decisive action to address the challenges that businesses face. By improving access to capital, streamlining bureaucracy, enhancing transparency, and supporting small and medium-sized enterprises, Ghana can unlock its full economic potential and position itself as a competitive player on the global stage. As businesses continue to look for growth opportunities, they are urging the government to provide the necessary tools and infrastructure to ensure their success.

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