Businesses optimistic about growth, call for urgent reforms – report

Businesses are optimistic about growth opportunities but have called for urgent reforms to address challenges hindering progress, says a report by UK-Ghana Chamber of Commerce (UKGCC).

The report, 2024 UKGCC Business Environment and Competitiveness Survey (BECS), revealed that while businesses are cautiously optimistic about future growth – particularly in technology adoption and market expansion, significant challenges remain.

The study surveyed 725 businesses, comprising UKGCC member and non-member companies from 22 industries on the availability of telecom, power, labour, water, logistics partners, taxation policy, cost of telecoms, government bureaucracy, regulatory framework and government support of exports.

The findings identify taxation policy, the cost of telecommunications, government bureaucracy and the regulatory framework as the top concerns for businesses in 2024.

It noted: “For the first time, cost of telecoms and the regulatory framework appeared on the list of poorly-rated business components, emphasising areas that require immediate government attention to enhance Ghana’s business environment”.

Despite these, businesses rated the availability of telecom facilities as the best-performing business component, though this rating declined from 36 percent in 2023 to 20 percent in 2024.

Other positively rated components include the availability of power, labour, water and logistics partners.

Technology and digitalisation

The report further indicated that businesses, especially in the manufacturing sector, are embracing digital tools to enhance productivity and reduce operational inefficiencies.

However, the manufacturing sector, which is a key cornerstone of the country’s economy, continues to face high production costs, including raw material costs and access to financing or capital.

“While there have been improvements in the availability of raw materials, respondents emphasised that the high cost of machinery and energy remains a significant barrier to scaling operations,” the report added.

Agriculture and services

The adoption of new technologies, according the report, is also gaining ground in the agriculture and services sectors, highlighting the role of innovation in improving productivity. However, some businesses still operate with outdated systems, indicating room for further technological advancement.

Other concerns

While recent reforms aimed at simplifying business processes such as registration and tax filing have been welcomed, respondents expressed concerns about the persistence of corruption and bureaucratic delays.

Corruption, for instance, remains a persistent issue, consistently appearing among the top five most declined components over the past four years.

These governance issues, the report says, continue to erode investor confidence and undermine the predictability of the business environment.

As such, respondents strongly emphasised the need for greater transparency and consistency in the regulatory framework, which would create a more enabling environment for both local and foreign investors.

Tax policy and the cost of power also remain key concerns, highlighting the need for government engagement to develop sustainable solutions.

“In terms of cost of doing business in Ghana, tax policy and macroeconomic challenges, including the weakening of the Ghana cedi, were highlighted as key drivers of high operational costs, thereby increasing cost of doing business. Persistent exchange rate volatility continues to influence the pricing of domestic factors of production.

“Respondents identified domestic marketing, certifications, quality control and labour as the most affordable business components over the past four years. However, rising inflation in 2024 has impacted the affordability of labour,” it stated.

The survey also found that cost of capital continues to be a major hurdle, particularly for small and medium-sized enterprises (SMEs), which account for a substantial portion of the private sector.

It stated that higher interest rates, combined with stringent lending conditions from banks, have made it difficult for businesses to secure funding. Hence, many respondents called for government intervention to ease these financial pressures, suggesting the need for targeted tax incentives and flexible financing mechanisms to support business growth.

They hold strongly that without improved access to affordable financing, many SMEs are at risk of stagnation, which could impede broader economic growth.

AfCFTA

The report also noted that businesses have mixed feelings about their preparedness for the African Continental Free Trade Area (AfCFTA). While many respondents recognise the significant opportunities AfCFTA presents—such as access to a larger market and the potential for increased exports, concerns remain about the level of readiness, especially among small and medium-sized enterprises (SMEs).

To fully benefit from AfCFTA, businesses are calling for more government support in safety and security of investment, low corruption and transparency, tax cuts, effective regulatory reform and quick approvals and effective bureaucracy that facilitate seamless intra-African trade.

The 2024 survey reveals a deepening call for government-business collaboration to address these challenges, with respondents seeking proactive engagement from the government  – particularly in addressing key bottlenecks such as high taxation, government corruption and bureaucracy and financing hurdles.

“By fostering a more inclusive, transparent and supportive business environment, Ghana can enhance its global competitiveness and drive sustainable economic growth,” the report stressed.

There is also a strong demand for policies that ensure the security of investments.

Comments

Commenting on the report, Country Senior Partner of PwC, consultants/advisors for the report, Vish Ashiagbor, stated the need for urgent pragmatic interventions that will reduce business challenges, create a stable regulatory environment and enhance transparency.

He added: “A pro-business government should review the approach for optimising its revenue mobilising potential and avoid further burdening the business community”.

For the Executive Director of UKGCC, Adjoba Kyiamah, “comprehensive reforms aimed at reducing these operational costs, improving access to affordable financing and incentivising energy-efficient technologies are essential”.

“Creating a safe and secure environment is paramount for fostering business confidence. Strategic investments in community policing, enhanced street lighting and an increased presence of security personnel can significantly reduce crime and ensure businesses thrive in a stable setting,” UKGCC Executive Council Chairman, Anthony Pile MBE, stated.