Industry players identify inflation and currency fluctuation as primary barriers to growth
A recent survey conducted by Deloitte Ghana has revealed that high inflation and currency fluctuations are among the major concerns for domestic producers, posing significant challenges to industry growth. According to the findings, 68 percent of manufacturers have identified inflation and currency fluctuation as the primary barriers to their expansion plans.
The audit, tax, and advisory services firm’s study further established that the cost of capital and lack of infrastructure are stifling growth for producers in Ghana. Additionally, the government’s aggressive drive for domestic revenue mobilization is seen as exacerbating pressures on the local business environment.
Surprisingly, the ‘global economic downturn’, often cited by the government as the main cause of the current economic crisis, received only a 34 percent mention in the survey’s responses.
Industry players expressed the belief that addressing these challenges could fuel growth by lowering the value-added tax (VAT) and encouraging more private sector participation. They also called for the abolition of certain nuisance taxes.
In terms of key expectations, the industry sought tax incentives, an increase in public capital expenditure (capex), and simplification of the capital gains tax structure. Respondents also emphasized the need for accelerated credit facilities.
Deloitte’s analysis highlighted the industry’s desire for the government to better understand their economic expectations, particularly regarding the impact of the domestic debt exchange program (DDEP) on the productive sector. The DDEP was introduced as a prerequisite for the approval of the International Monetary Fund (IMF) program.
Although industry players are cautious about the government’s ability to implement growth-driving policies, they believe that tax waivers and green financing incentives could propel Ghana towards its carbon-neutral commitments. Approximately 73 percent of respondents indicated strong support for tax incentives and subsidies to promote a green economy.
Looking ahead, respondents identified the extractive, services, and agriculture sectors as potential drivers of economic growth in the second half of 2023. About 69 percent of those surveyed believe that without changes in current tax policies, the services sector will be at the forefront of driving growth, followed by the extractive and agriculture sectors.
To enhance productivity and increase exports, industry players recommended measures such as improved credit availability and reduced customs fees. They also proposed reviewing capital allowance deductions for specific vehicles, abolishing financial sector recovery levies, and eliminating the minimum chargeable income regime.
Yaw Appiah Lartey, Partner-Financial Advisory at Deloitte Ghana, presented the survey report at a pre-mid-year budget discussion titled ‘Positioning for sustainable recovery; Ghana’s economic outlook post-IMF deal’. He emphasized the industry’s struggles and the prevailing focus on survival amidst challenging economic conditions.
