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25th April, 2012
Businesses In Ghana Are Suffering. Who will help them?
As a young boy growing up at Accra New Town in the late 70s, I used to sit in front of our house in the evenings watching the vehicles of some big companies who had picked their staff to work in the morning, drop them off after the close of work.
It was a common practice at the time for both public and private sector companies to own vehicles that only transport workers to and from work. Because of this, I became interested in working for a big organization someday.
Among the companies that quickly come to mind are Volta Aluminium Company, Tema Shipyard, Ghana Textile Manufacturing Company, Tema Textiles, Ghana Railways, State Fishing Corporation, Black Star Line, Kingsway Stores, International Tobacco, Guinness Ghana Ltd, Tata Brewery, Alucan Ghana Ltd, the GIHOC group of companies, Ghana Airways, State Construction Corporation and Willowbrook Ghana Ltd.
Today, most of these private and public companies have folded up. Those that are still around are not operating at full capacity. The crux of the matter is that businesses in Ghana are facing numerous challenges that warrant immediate attention. But it doesn’t look like much is being done to remedy the situation.
On a daily basis we talk about wooing investors into the country - ostensibly to raise new businesses. How about bailing out the existing ones that are in distress?
THE CHALLENGES
Ghanaian companies face challenges ranging from acquisition of land or a building to house the entity, to regular water and electricity supply for production. Somewhere along the way is ineffective marketing also. These challenges affect every aspect of their operations’ capital acquisition.
In Ghana, to get capital either to start a business or to expand it is not a joke. Even putting together the documents required by the Banks before getting financial assistance from them can be tedious. Processing fees and other related issues are the other side of the problem. The cost of finance and credit even when the credit is available is a different ball game. Then the Banks’ high interest rate.
It is common knowledge that the high interest rates, some of which contribute to the high default rate, have all resulted in the collapse of some companies. It will be important for the stakeholders to meet and take a critical look at the interest rate regime in the country and if possible, do something about it.
LAND ACQUISITION
In this country, most of the lands belong to families. In a few cases they belong to traditional authorities or the government. In some cases, because of land fragmentation, it is a problem to get vast hectares of land for commercial projects. Even where these lands are available there are difficulties surrounding their genuine acquisition and registration.
One piece of land can be sold to two or four people at the same time. People who don’t directly own the land can also ‘steal’ and sell it. Unfortunately, many people have been duped this way.
The size of the market for a product is a prerequisite for the growth of a company. The bigger the size of the market the larger the demand size for goods and services. The fact that the market is small for certain goods and services in Ghana does not mean one needs to sit down and fold his or her arms.
Businesses must either explore new markets for their products, or create new products for the existing market, or create new market for them. None availability of market can affect the growth of your business so don’t allow it. Move on, for that is the spirit of business.
COMMITTED & COMPETENT STAFF
Ghana generally can relatively boast of competent and committed workers. This is prerequisite for a serious economic take off. Unfortunately, not every company in the country can boast of this. In the public sector, workers at times exhibit negative work culture and attitudes among which are apathy, lack of commitment towards company activities, pilfering and unnecessary agitation.
In the public sector again, some workers don’t want to ‘kill’ themselves on the job because of the old mentality that it is “obroni” or “aban adwuma” (government work). We must understand that it is not only ‘leadership with vision’ that matters but also staff who are committed to the course of the enterprise.
Many businesses in Ghana are in crisis because of power outages and water shortages. Due to interruptions in power supply, even the one-man kiosk owner, depending on what he or she trades in, is compelled to purchase a stand-by generator. Every large or medium scale enterprise is obligated to have a standby generator or risk the consequence of a power outage.
Water supply to industries and companies are at times irregular. Those who want to stay in business are compelled to install huge water tankers as reservoirs. The prices industries have to pay to constantly fill the reservoirs with water and the cost of diesel to power the generators end up eroding the profits they make. In most cases, organizations’ budgets and profits are thrown out of gear.
THE TAXES
In Ghana, the tax net is not widely spread, so only a few companies and firms continue to pay their taxes. And because many others dodge tax payment, the few responsible firms appear to be over taxed. We always talk of bringing in investors without looking at the tax relief system enjoyed in some countries. For instance, what is the general tax structure after the elapse of the relief period? Very high!
This is serious because the Value Added Tax, corporate tax and others all affect companies directly or indirectly. Our tax system needs a total overhauling. Some time ago, I learnt of something called Development Tax! Where from that also? Yes, there is the need for tax collection, but taxes should not be disincentive to the growth and development of businesses.
THE MARKETS
It seems most Ghanaian businesses are not interested in going international. Only a few have in recent times done that although there are many that should have gone global by now. Interestingly, companies in other countries are seriously aiming at global markets.
Ghanaian firms must strategise to enter foreign markets as they stand to gain from extended and expanded markets. Globalisation is now the order of the day and companies which cannot go international are not likely to make it big.
One major problem facing our industries is that of bureaucracy, which most of the time result in unnecessary delays. It is not easy to get a business registered. Quite recently I met a South African businessman at a programme in Accra. He complained bitterly about how he was suffering to get his papers through, and told me that when he went to Togo, he got the same papers in less than two weeks.
Here, in addition to the delays is the issue of corruption. Every office that he entered, according to him, he had to pay something. To him, ‘doing business in Ghana is hell’.
Well, a lot of people have complained about how difficult it is to do business in Ghana. Something serious must be done about it. And also about the cumbersome procedure for clearing goods at the ports, which comes with its own price. Policy makers and officials must once again take a holistic view of these challenges as they seriously affect business operations.
COMPETITION FROM FOREIGNERS
Our local companies, in spite of their small market continue to face stiff competition from foreigners. Ghanaian markets have been taken over by companies from China, India, Dubai, Hong Kong, Malaysia and others. Foreigners are even in retail business and they bring in cheap products at cheap prices, rendering locally produced items expensive, uncompetitive and beyond the reach of the ordinary Ghanaian.
This has crippled many businesses; an example is the poultry sector, where some giant poultry companies have collapsed due to the influx of cheap imported poultry products. Unfortunately we have allowed expatriates to infiltrate everywhere. They are even doing ‘galamsey’.
The use of outmoded technology is also running down companies. Every company needs to always update its technology to meet modern day standard and become cost effective. However, financial constraints do not allow most of our companies to do this. And it’s no big deal currently to see some offices still using Olympia typewriters.
THE ECONOMY
Businesses operate within the national economy and if the economy is not in good shape it affects them. Inflation is a common feature in the country and prices are never stable. The exchange rate is also never stable and that seriously affects both imported raw materials and the finished products.
It is common knowledge that the cedi is depreciating fast against other international currencies; this takes a toll on the operations and activities of business. A country with a good economy and a stable rate of inflation ensures the survival and growth of businesses.
In conclusion, all is not well with businesses in Ghana. What we need now is action to ensure that collapsing companies are revived and strengthened, those standing on their feet are supported to ensure continuous growth and new ones established on a right footing to ensure survival and endurance.
Today, I am urging the Ghana National Chamber of Commerce, the Association of Ghana Industries, the Private Enterprises Foundation and other such bodies to stand up and speak for themselves. The era where others’ causes are championed for them are gone. Now, it is “each one for himself, God for us all”.
Until solutions are found to the challenges, Ghanaian industries will continue to be where they are. And that won’t augur well for the growth and development of Mother Ghana. The Ministry of Trade and Industries should throw its full weight behind Ghana’s industries and companies. When our businesses progress Ghana would enjoy the benefits.
The writer is Managing Director, New Times Corporation.
It was a common practice at the time for both public and private sector companies to own vehicles that only transport workers to and from work. Because of this, I became interested in working for a big organization someday.
Among the companies that quickly come to mind are Volta Aluminium Company, Tema Shipyard, Ghana Textile Manufacturing Company, Tema Textiles, Ghana Railways, State Fishing Corporation, Black Star Line, Kingsway Stores, International Tobacco, Guinness Ghana Ltd, Tata Brewery, Alucan Ghana Ltd, the GIHOC group of companies, Ghana Airways, State Construction Corporation and Willowbrook Ghana Ltd.
Today, most of these private and public companies have folded up. Those that are still around are not operating at full capacity. The crux of the matter is that businesses in Ghana are facing numerous challenges that warrant immediate attention. But it doesn’t look like much is being done to remedy the situation.
On a daily basis we talk about wooing investors into the country - ostensibly to raise new businesses. How about bailing out the existing ones that are in distress?
THE CHALLENGES
Ghanaian companies face challenges ranging from acquisition of land or a building to house the entity, to regular water and electricity supply for production. Somewhere along the way is ineffective marketing also. These challenges affect every aspect of their operations’ capital acquisition.
In Ghana, to get capital either to start a business or to expand it is not a joke. Even putting together the documents required by the Banks before getting financial assistance from them can be tedious. Processing fees and other related issues are the other side of the problem. The cost of finance and credit even when the credit is available is a different ball game. Then the Banks’ high interest rate.
It is common knowledge that the high interest rates, some of which contribute to the high default rate, have all resulted in the collapse of some companies. It will be important for the stakeholders to meet and take a critical look at the interest rate regime in the country and if possible, do something about it.
LAND ACQUISITION
In this country, most of the lands belong to families. In a few cases they belong to traditional authorities or the government. In some cases, because of land fragmentation, it is a problem to get vast hectares of land for commercial projects. Even where these lands are available there are difficulties surrounding their genuine acquisition and registration.
One piece of land can be sold to two or four people at the same time. People who don’t directly own the land can also ‘steal’ and sell it. Unfortunately, many people have been duped this way.
The size of the market for a product is a prerequisite for the growth of a company. The bigger the size of the market the larger the demand size for goods and services. The fact that the market is small for certain goods and services in Ghana does not mean one needs to sit down and fold his or her arms.
Businesses must either explore new markets for their products, or create new products for the existing market, or create new market for them. None availability of market can affect the growth of your business so don’t allow it. Move on, for that is the spirit of business.
COMMITTED & COMPETENT STAFF
Ghana generally can relatively boast of competent and committed workers. This is prerequisite for a serious economic take off. Unfortunately, not every company in the country can boast of this. In the public sector, workers at times exhibit negative work culture and attitudes among which are apathy, lack of commitment towards company activities, pilfering and unnecessary agitation.
In the public sector again, some workers don’t want to ‘kill’ themselves on the job because of the old mentality that it is “obroni” or “aban adwuma” (government work). We must understand that it is not only ‘leadership with vision’ that matters but also staff who are committed to the course of the enterprise.
Many businesses in Ghana are in crisis because of power outages and water shortages. Due to interruptions in power supply, even the one-man kiosk owner, depending on what he or she trades in, is compelled to purchase a stand-by generator. Every large or medium scale enterprise is obligated to have a standby generator or risk the consequence of a power outage.
Water supply to industries and companies are at times irregular. Those who want to stay in business are compelled to install huge water tankers as reservoirs. The prices industries have to pay to constantly fill the reservoirs with water and the cost of diesel to power the generators end up eroding the profits they make. In most cases, organizations’ budgets and profits are thrown out of gear.
THE TAXES
In Ghana, the tax net is not widely spread, so only a few companies and firms continue to pay their taxes. And because many others dodge tax payment, the few responsible firms appear to be over taxed. We always talk of bringing in investors without looking at the tax relief system enjoyed in some countries. For instance, what is the general tax structure after the elapse of the relief period? Very high!
This is serious because the Value Added Tax, corporate tax and others all affect companies directly or indirectly. Our tax system needs a total overhauling. Some time ago, I learnt of something called Development Tax! Where from that also? Yes, there is the need for tax collection, but taxes should not be disincentive to the growth and development of businesses.
THE MARKETS
It seems most Ghanaian businesses are not interested in going international. Only a few have in recent times done that although there are many that should have gone global by now. Interestingly, companies in other countries are seriously aiming at global markets.
Ghanaian firms must strategise to enter foreign markets as they stand to gain from extended and expanded markets. Globalisation is now the order of the day and companies which cannot go international are not likely to make it big.
One major problem facing our industries is that of bureaucracy, which most of the time result in unnecessary delays. It is not easy to get a business registered. Quite recently I met a South African businessman at a programme in Accra. He complained bitterly about how he was suffering to get his papers through, and told me that when he went to Togo, he got the same papers in less than two weeks.
Here, in addition to the delays is the issue of corruption. Every office that he entered, according to him, he had to pay something. To him, ‘doing business in Ghana is hell’.
Well, a lot of people have complained about how difficult it is to do business in Ghana. Something serious must be done about it. And also about the cumbersome procedure for clearing goods at the ports, which comes with its own price. Policy makers and officials must once again take a holistic view of these challenges as they seriously affect business operations.
COMPETITION FROM FOREIGNERS
Our local companies, in spite of their small market continue to face stiff competition from foreigners. Ghanaian markets have been taken over by companies from China, India, Dubai, Hong Kong, Malaysia and others. Foreigners are even in retail business and they bring in cheap products at cheap prices, rendering locally produced items expensive, uncompetitive and beyond the reach of the ordinary Ghanaian.
This has crippled many businesses; an example is the poultry sector, where some giant poultry companies have collapsed due to the influx of cheap imported poultry products. Unfortunately we have allowed expatriates to infiltrate everywhere. They are even doing ‘galamsey’.
The use of outmoded technology is also running down companies. Every company needs to always update its technology to meet modern day standard and become cost effective. However, financial constraints do not allow most of our companies to do this. And it’s no big deal currently to see some offices still using Olympia typewriters.
THE ECONOMY
Businesses operate within the national economy and if the economy is not in good shape it affects them. Inflation is a common feature in the country and prices are never stable. The exchange rate is also never stable and that seriously affects both imported raw materials and the finished products.
It is common knowledge that the cedi is depreciating fast against other international currencies; this takes a toll on the operations and activities of business. A country with a good economy and a stable rate of inflation ensures the survival and growth of businesses.
In conclusion, all is not well with businesses in Ghana. What we need now is action to ensure that collapsing companies are revived and strengthened, those standing on their feet are supported to ensure continuous growth and new ones established on a right footing to ensure survival and endurance.
Today, I am urging the Ghana National Chamber of Commerce, the Association of Ghana Industries, the Private Enterprises Foundation and other such bodies to stand up and speak for themselves. The era where others’ causes are championed for them are gone. Now, it is “each one for himself, God for us all”.
Until solutions are found to the challenges, Ghanaian industries will continue to be where they are. And that won’t augur well for the growth and development of Mother Ghana. The Ministry of Trade and Industries should throw its full weight behind Ghana’s industries and companies. When our businesses progress Ghana would enjoy the benefits.
The writer is Managing Director, New Times Corporation.
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