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Ghana: Access to Finance A Major Challenge to Doing Business
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Public Agenda (Accra)
25 July 2008
Posted to the web 25 July 2008
Frederick Asiamah
Private sector business executives have identified access to financing as the major challenge to doing business in Ghana, according to results of the Executive Opinion Survey 2008 - Ghana.
Access to finance scored an average of 222 points out of a possible 500 and was ranked 30 times by respondents as the main challenge to doing business. It scored more than 250 points among excutives of Ghanaian-owned businesses while excutives of foreign-owned firms gave it less than 150 points, suggesting they had easy access to finance than their local conterparts.
Managers of the Ghanaian economy have said that the private sector had more access to credit now than before, but the study appeared to put a dampener on the claim.
Presenting the findings in Accra on Tuesday, Mr Tony Oteng-Gyasi, President of the Association of Ghana Industries (AGI) said credit to the private may have increased all right but wondered whether the credit was not going more to individual workers than to companies.
The AGI, a partner organisation of the World Economic Forum (WEF), conducted the Executive Opinion Survey (EOS) in April 2008 for the WEF. The EOS was a major component of the Global Competitiveness Report, published annually by the WEF.
The study looked at two main issues: competitiveness and productivity. Competitiveness was viewed in terms of factors, policies and institutions that determine the level of productivity of a country while productivity was determined as the main driver of investment and growth.
More than 500 companies were invited and exactly 101 CEOs completed 20-page questionnaires. The respondents were sampled from the Greater Accra (Accra and Tema), Ashanti, Central, Eastern and Western regions. 75 CEOs responded for Ghanaian-owned businesses with another 26 responding for businesses with headquarters elsewhere across the world. 16 out of the 26 were euorpean-owned, four had African ownership while USA and Asia owned three businesses each.
In terms of sectors, industry and services had 46 respondents each while agriculture took the other nine respondents. By size, 45 CEOs responded for small businesses, 44 for medium enterprises and another 12 respondents for big businesses. The study defined small businesses as those with up to 100 workers and a turnover below GH¢1 million per anum; medium as those with 101 to 1,000 workers and turnover of up to GH¢100 million; and big firms as those with more than 1,000 workers and turnover above GH¢100 million.
The CEOs were asked to select up to 5 challenges from a menu of 15 and rank these from 1 to 5. The researchers weighted the answers with factor 5 for the highest ranking and 1 for the lowest ranking challenge. Any challenge could score a maximum of 505 points, if all 101 respondents would give highest priority to this factor.
Access to finance, inadequate infrastructure, bureaucracy, poor work ethics of labour force and corruption ranked in that order as the top five challenges to doing business in Ghana today.
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That notwithstanding, majority of the respondents (65) had positive growth expectations.
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