Ghana’s push to establish a 24-hour economy and stabilize its currency faces headwinds from rising electricity tariffs, according to the Ghana Union of Traders Association (GUTA).
President Joseph Obeng argues that recent utility price hikes, implemented despite the cedi’s rebound, risk undermining industrial growth and eroding investor confidence.
The comments follow a tariff adjustment this month by Ghana’s Public Utilities Regulatory Commission (PURC), which tied rates partly to exchange rate fluctuations. While the cedi has gained 20% against the dollar since February through tighter fiscal policies and central bank interventions, businesses now grapple with electricity costs that remain elevated. Obeng contends this disconnect threatens to negate macroeconomic progress.
“Investors considering manufacturing in Ghana first ask about power costs,” Obeng told JoyNews in an interview monitored by The High Street Journal. “When they hear our tariffs, many reconsider.” His warning highlights the delicate balance between fiscal recovery measures and nurturing labor-intensive sectors. The government’s 24-hour economy initiative, designed to boost production and curb unemployment, relies heavily on affordable, reliable energy to attract factories and extend operating hours.
Data from Ghana’s Energy Commission shows industrial electricity tariffs have risen 12% since 2023, reaching ¢1.42 per kWh for medium-voltage users. Though lower than regional peers like Nigeria and Togo, Obeng argues local industries face unique pressures: inflation hovering near 25%, high borrowing costs, and tax burdens. “These cumulative costs make Ghanaian goods uncompetitive,” he said, noting that many traders now struggle to restock inventories.
The PURC maintains that tariff adjustments reflect operational costs for utilities like the Electricity Company of Ghana, which relies on dollar-denominated fuel imports. However, Obeng questions the timing: “With exchange rate gains, why insist on higher tariffs? This undermines our own recovery.” GUTA has urged immediate government intervention to review the pricing formula, emphasizing that energy costs account for up to 40% of production expenses in sectors like textiles and food processing.
The debate echoes broader challenges across African economies seeking to industrialize amid unreliable power infrastructure. While Ghana’s grid access rate surpasses 85%, frequent outages and costly backup generator use persist. The World Bank estimates such inefficiencies shave 2-4% annually from the country’s GDP growth.
Analysts note that resolving the tariff impasse requires nuanced solutions. “Subsidizing industrial power without fiscal prudence could strain public finances,” said Kofi Yamoah, an Accra-based energy economist. “But strategic rate adjustments for target sectors, paired with renewable energy incentives, might ease the transition to 24-hour operations.”
Ghana’s predicament mirrors dilemmas from Kenya to South Africa, where governments juggle utility viability against industrial ambitions. As the PURC prepares its mid-year tariff review in July, stakeholders await signals on whether macroeconomic gains will translate into actionable relief for businesses.
The outcome could determine not just the fate of round-the-clock productivity drives, but also Ghana’s bid to position itself as a West African manufacturing hub amid fierce continental competition.
The situation underscores a recurring theme in emerging markets: currency stability alone cannot catalyze industrialization without parallel attention to structural costs. For Ghana, aligning energy pricing with its economic ambitions may prove as critical as any exchange rate policy in securing long-term growth.
