Public Agenda (Accra)
Frederick Asiamah
18 August 2008
A combination of scarce cash and higher prices of goods are deterring consumers from buying more items than they did two months ago, a cross-section of traders in Madina, one of the capital's ever-growing market centres, complained.
Speaking separately with Public Agenda just before the weekend, majority of the traders claimed they sold fewer goods in August than June 2008 or even the corresponding period of 2007.
Virtually all of them agreed, "There is no money in the system." Apart from that they said price hikes and ever-increasing number of people trading the same items were also to blame for the downward trend.
Last week the Ghana Statistical Service announced that inflation dropped in July for the first time in 10 months.
A report filed for Reuters from Accra said "Inflation eased to 18.31 percent in July from 18.41 percent in June." The same report quoted government statistician, Nicholas Nuamah as saying that prices of services, transport and food remained high, confirming what the traders told this paper.
According to a rice dealer, Peace, a 25kg bag of rice, which sold at GH¢35 in May was now GH¢42 despite government announcing late in May 2008 some interventions aimed at bringing down prices of food, fuel, transportation and others.
She also gave the current price of a 5kg bag of rice as ranging from GH¢9 to GH¢9.5 (depending on the brand) up from GH¢ 7.5 in May 2008. Similarly, a 4-litre Frytol oil was now GH¢12 up 33% from GH¢9 three months ago.
Consequently, Peace said sales had plummeted. "We used to sell about 20 of the 5kgs a week but now we sell only ten."
Diana Nyarko, a fruit seller said the price of a big box of bananas was double that of 2007. Previously, it went for GH¢12 but currently the price stood at GH¢24.
Salomey, who sells pineapples said her items cost more today than before. However, she attributed the higher prices to shortage of pineapples on the local market.
"They say they are exporting them so we can't get enough to buy," she told Public Agenda.
Other people who traded in household accessories and appliances, building materials and clothing also complained of declining sales. They blamed other factors including a falling cedi for the rising cost of items and the consequent lower patronage.
2008 has seen sharp price rises driven by rising global fuel and food markets. This has in turn pushed inflation up in the last few months. In July, this development forced the Bank of Ghana to raise interest rates to a three-year high of 17 percent even though the increase was less than analysts had expected.
Rising prices have put an original government target of nearly halving inflation to 8 percent by the end of the year well beyond reach. Besides, the cedi has depreciated steadily against the dollar in recent months.
Private sector business executives who participated in the Executive Opinion Survey 2008 - Ghana named inflation as the seventh major challenge to doing business in Ghana. The Association of Ghana Industries (AGI undertook the EOS 2008 for the World Economic Forum (WEF) for input into Global Competitiveness Report, an annual publication of the WEF.
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 European-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.
Three months ago, President John Agyekum Kufuor announced measures to mitigate the effects of the rising costs of petroleum products and food in the country, which he said was throwing the 2008 budget out of gear.
He accepted that the swelling costs of transportation, utilities and food, were "making life difficult for everybody.
"First, import duties on rice, wheat, yellow corn and vegetable oil are removed. Importers are therefore enjoined to reduce prices accordingly. Indeed, it should be a criminal offence to attempt to re-export these items, which are being declared tax-exempt purposely for the benefit of the local market."
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