The high cost of credit, cedi to the dollar exchange rate, and current inflation are inimical to the government’s quest to industrialize the country and need to be dealt with urgently, Dr. Priscilla Twumasi Baffour, Senior Lecturer of the Economics Department at the University of Ghana has said.
“With a stable macroeconomic environment, we are talking about the interest rate which is the cost of capital a stable currency is a requirement in our industrialization drive, and we also need to keep inflation under control,” she listed what constituents the mentioned macroeconomic environment.
“Indeed manufacturing is not attractive and when you come to speak to our business people. It is more attractive to buy and sell in Ghana than to manufacture. Most of the challenges in the sector are quite daunting.
Talk about infrastructure, access to credit, cost of energy, the whole business environment with regulation is not friendly for manufacturing activity that is why most people would rather go outside produce goods with local names and bring them onto the market to sell,” she said.
Speaking on NewsFile on Accra-based Joy FM, said these challenges need to be addressed else Ghana “stands to lose when we do not position our manufacturing firms to take advantage of opportunities that come with the Free trade area.”
In addressing the high-interest rates, she advised the government to curb borrowing and not compete with industry for private capital domestically.
“We need to put our borrowing in check so that government is not forced to go and borrow in the private sector,” advising the government to keep “budget in check in terms of revenue and expenditure.”
The Services sector is projected by the government to grow at an average rate of 5.1 percent over the medium-term (2021-2024), growing by 5.6 percent, 4.9 percent, 4.8 percent, and 5.1 percent in 2021, 2022, 2023, and 2024, respectively.
The growth is expected to be driven by a continued strong growth performance in the Information and Communication subsector. The subsector is expected to record an average growth of 9.3 percent from 2021 to 2024.
The Hotels and Restaurants subsector is expected to recover gradually from the severe contraction it experienced in 2020. The subsector is expected to register a growth of 2.0 percent in 2021, 4.0 percent in 2022, 6.2 percent in 2023, and 6.5 percent in 2024.
The Trade, Repair of Vehicles, Household Goods subsector is also expected to recover with an average growth of 4.1 percent over the medium-term.
Dr. Baffuor, in an earlier interview, noted that growth in services, though laudable, does not generate enough jobs, as the manufacturing sector would have with the right support.
“The challenge with services being the driver of the growth is that services are not labor-intensive activities. Services require your tertiary-educated graduate at the higher end of your services. The other bit of the services we see in Ghana is that it is dominated by informal activities and that explains the precarious job situation we have in Ghana,” she said.