Nana Owusu Afari, AGI President
Nana Owusu Afari, AGI President

Once again, industry players have identified disruptions in power supply as a major factor affecting the performance of their businesses and have called for speedy action in resolving the power crisis. The latest results of the Association of Ghana Industries [AGI] quarterly Business Barometer Survey released recently indicates that the power crisis bedeviling the country has seriously affected businesses of all sizes in the first quarter of 2013.

This is the second time in three quarters, that poor power supply has emerged a leading challenge to all sectors of industry and restricting the growth of businesses. The Association has attributed the development to the intense load shedding exercise embarked upon by the Electricity Company of Ghana in the first quarter of this year. The regular twin-challenge of difficulty in accessing credit and high cost of credit, were ranked second and third, respectively, according to the survey.

?The private sector is concerned about the continuous power cuts witnessed in the country over the last six months because it disrupts business operations?[which] lead to short fall in production and revenue losses to businesses, which are unable to procure generators to continue operations,? President of the AGI, Nana Owusu-Afari commented, adding that ?On the other hand, the power cuts lead to increased cost of doing business as companies which can afford invest in contingency plants/generators and fuel to undertake normal operations.?

?Either way, regular power cuts as being experienced in the country limits industry?s international competitiveness,? he stated.

The AGI, on quarterly basis interacts and interviews top industry experts, business owners and managers on the performance of their businesses and what they make of the current business environment among others. The result of the survey for the last three quarters, have consistently mentioned poor power supply as a major challenge to businesses in the country.

There is a dip in business confidence in Ghana, according to the first quarter results of this year?s Business Barometer Indicator, in spite of marginal increase in expectation of the Business Community. Whilst about 69.5% of the CEOs interviewed in the quarter expect the performance of their businesses to improve in the second quarter, about 67% of the captains of industry interviewed in the last quarter of last year felt same for? quarter one of 2013.

The largest mover between fourth quarter of 2012 and first quarter of 2013 is high cost of raw materials, which dropped from third to sixth in 2013.

Interestingly also, and for the first time high utility prices did not feature in the overall major challenges since the commencement of the Business Barometer Survey in the second quarter of 2010, when energy prices were increased over 90%.

Again, inflation which did not feature in the overall major challenges in the last quarter of 2012, was ranked eighth in quarter one of 2013. This, according to AGI, is consistent with the inflationary pressures witnessed in the first quarter of 2013, that is, 8.8%, 10.0% and 10.4% in January, February and March, respectively.

On sector basis, access to credit, high cost of raw materials and cost of credit all maintained their first, second and third positions in the Agriculture Sector. The prominence of these challenges call for implementation of policies to address them. Whilst depreciation of the cedi which featured in the top challenges of the Agriculture sector in Q1 2013 did not appear in that of Q4 2012, lack of market which was ranked fourth in Q4 2012 did not feature in Q1 2013 at all.

Access to credit, delayed payment and cost of credit were identified as the top three obstacles limiting growth of players in the Construction Sector. Whilst access to credit moved from third position in Q4 2012 to first in Q1 2013, delayed payment dropped from first to second over the same period. Lack of contracts was the greatest mover, dropping from second position in Q4 2012 to sixth position in Q1 2013. Inflation which was ranked eighth in Q4 2012 was not ranked among the top ten in the sector.

The operators of the manufacturing sector interviewed revealed poor power supply, access to credit and depreciation of the cedi as the key obstacles restricting expansion of the manufacturing business in Ghana. Lack of raw materials which did not feature in the top ten of the sector in Q4 2012 was ranked tenth in Q1 2013, whilst, low purchasing power which ranked 10th in Q4 2012 did not feature at all in Q1 2013.

The Service Sector also ranked poor power supply, depreciation of the cedi and access to credit as first, second and third, major challenges respectively.

Source: Jeorge Wilson Kingson (The Business Analyst)


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