Businesses are thinking of how much they can rely on economic stability – Vish Ashiagbor

The Country Senior Partner at PwC Ghana, Vish Ashiagbor has shared his insights on the current economic climate in Ghana, stressing a cautious optimism among private sector businesses.

“It is important to acknowledge that it is not all bad,” he stated.

“There is cautious optimism because the private sector will always acknowledge that there has been a certain amount of stability emerging, and the prospects look reasonable,” he said on Thursday.

However, he noted that while there is a sense of emerging stability, there is also lingering trepidation regarding its sustainability.

Businesses, he explained, are looking beyond short-term impacts to focus on long-term stability.

“For example, if you take the exchange rate, you have to acknowledge there is relative stability in the last couple of months,” Mr Ashiagbor said.

“If you are a business person and you are thinking a year ahead, 18 months, or 5 years ahead, what is your outlook? That is still uncertain.”

Despite the uncertainty, the Country Senior Partner at PwC Ghana mentioned that he is not overly worried about the performance of the local currency.

Instead, he highlighted other significant concerns for businesses, particularly in an import-dependent economy like Ghana’s.

“The forex is a significant factor because of the nature of Ghana’s economy,” he said. “If you are a manufacturer and you have to import raw materials, the rate will be important to you; if you are in the service industry, some inputs like licensing fees for technology applications that you may deploy may be indexed to the dollar, because these are global products.”

Mr Ashiagbor pointed out that businesses are also concerned about consumer demands, which are affected by the elasticity of products.

He stated that business is a long-term venture and decisions should not be based solely on short-term indicators.

“Business has its ups and downs so if the exchange rate goes off track, it does not mean you go laying off people. By the same token, if the rates strengthen, you take the benefit.

“It is all in your bottom line and eventually into your cash flows, but when it becomes unsustainable, that is when you run into real difficulty,” he explained.

He noted that the relative stability in the exchange rate allows businesses to consider long-term investment decisions more carefully.

“The benefit of the relative stability is that businesses are thinking of how much they can rely on it and whether to link long-term investment decisions based on the stability or hold back a little bit and see what the outlook is. That is where most businesses are,” he stated.

Mr Ashiagbor also expressed some comfort in the fact that Ghana has clear indicators to adhere to under the IMF program, which he believes the country is on course to meet.