Inflationary pressures: Ghana needs to focus on SMEs and export-oriented agribusinesses

Economists have urged the government to ensure its flagship programs are well-coordinated

Economic experts say Ghana needs to target specific small and medium enterprises (SMEs) and agribusinesses with export value and competitive advantage and support them with financial and material resources.

This, they said, would help make the economy resilient to inflationary shocks while creating sustainable jobs, especially for the youth, and addressing the economic challenges currently facing the country.

They also called on the government to create an enabling environment that would support the growth and expansion of export-oriented entrepreneurs and agribusinesses that had the potential to develop into large-scale enterprises.

They also called on the government to ensure that its flagship programs, including Planting for Food and Jobs (PFJ), One District-One Factory (1D1F) and the YouStart initiative (still to be implemented), are well coordinated and export oriented.

Dr. Patrick Asuming and Dr. Daniel Amateye Anim-Prempeh, both economists, observed that the programs were good on paper, but their implementation had not yielded the expected result on the economy, especially the creation of sustainable jobs.

They said this in an interview with the Ghana News Agency in Accra regarding the current economic situation in the country.

Since the beginning of the year, Ghana has been experiencing inflationary challenges, such as rising food, fuel and transport tariffs, exchange rate and depreciation of the Cedi.

These resulted in a high cost of living and aggravated the plight of individuals (especially workers who saw no increase in wages), as well as industries and traders, who saw their costs of production and import increase.

Dr Asuming, who is a senior lecturer at the University of Ghana Business School, noted that all these events in the country underscored the fact that although there had been some growth in the economy , it had not given the required results.

He said: “Although there has been some growth in the economy, from 0.4% in 2020 to 5.4% in 2021, the growth has not been fast enough and we are not creating enough jobs… moreover, public finances have deteriorated.”

He explained that to emerge from the current economic difficulties, it was necessary to help small businesses to grow at a faster pace and to stimulate agriculture and agribusiness, which had the potential to create many jobs. .

“We should identify and target specific promising business ventures that have the capacity to export and employ more people, because there are enough innovations around us (in agribusiness for example) that we can help develop,” said Dr. Asuming.

He also called on the government to ensure that the general cost of doing business and other issues that prevent businesses from growing are taken into account.

Dr Anim-Prempeh, said: “As much as on paper the government policies are very good, the lack of coordination and focus is what is preventing us from seeing the necessary dividend from all these flagship programs.

He said Ghana had not reached the point where the private sector alone could drive the growth of the economy as many of them were financially and technologically handicapped.

Therefore, the government must provide the necessary support through deliberate policies that would give SMEs the potential to grow and export to other countries to produce at scale.

This would help create more sustainable jobs and put money in people’s pockets, which, in turn, would minimize the impact of the economic difficulties facing the country.

He said: “There is a need to review the manufacturing program and see how we can strengthen 1D1F so that we are not heavily dependent on others for the kinds of things we need in this country.”

The Economist also reported that now is the time for Ghana to attract investors to the cocoa and cashew sectors to add value to products and help farmers have year-round production.

The current economic difficulties have been caused by factors such as rising fuel prices and associated higher transport tariffs, the depreciation of the Cedi against its main trading partners and high production costs.

For example, diesel, which sold for GHS 7 per liter in January, now sells for GHS 11.95 per liter (a 70.71 percent increase), while the price of petrol per liter of petrol which was 6.8 GHS, increased to 9.85 GHS. (a 44% increase).

Figures provided by the Ghana Statistical Service (GSS) showed that the year-on-year inflation rate for food and non-alcoholic beverages was 13.7% in January 2022. It rose to 26.6% in April 2022.

Additionally, the Consumer Price Index (CPI) showed that the transport component of inflation in January, which was 17.4%, increased to 33.5% in April.

Producer price inflation (PPI), which measures the average change over time in the selling prices received by domestic producers for the production of their goods and services, rose to 31 percent from 15.6 percent in January, 2% in April.

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