New data from the Ghana Statistical Service (GSS) has revealed the devastating impact of the coronavirus pandemic on the economy, as a horrifying 161,066 businesses were closed as of June 2020 despite ease of some of the restrictions.
According to the GDP data for the second quarter of the year, businesses in the services sector recorded the highest number of closures as more than 96,200 businesses were not operating within the period under discussion.
Trade followed with more than 27,200 business closures, with accommodation and food also seeing more than 16,900 businesses closed in the period.
The manufacturing sector also had more than 14,900 businesses closed; with agriculture and other industry also seeing 5,157 and 445 businesses closed.
The business closures were largely due to measures announced by government to contain the spread of the virus which included imposing restrictions on movements of people; closing of in-land and air borders; shutting of events centres and hotels for conferences and other gatherings, among others – all of which had consequences on other ancillary businesses.
All these led to the full or partial closure of such businesses, leading to huge loses to them. For example, sales revenue among accommodation and food businesses dropped to as low as GH¢700,000 in April compared to GH¢2.5 million in April 2019.
The manufacturing sector also saw sales revenue slashed by almost half, recording GH¢25.6 million in April compared to GH¢44.9 million same period last year.
Restrictions on travel and trade also saw sales revenue from the sector drop to GH¢30.5 million in April from GH¢45.5 million in 2019 same period.
Government has outlined plans to bring the economy back to life. It has established a guarantee scheme of up to GH¢2 billion to enable business borrow from banks at more affordable rates; increased funding to the CAP-BuSS Programme being run by National Board for Small Scale Industries (NBSSI); and provide seed-fund for a retraining programme to help workers who are laid off because of COVID-19 to develop new skills.
Another ambitious programme is the COVID-19 Alleviation and Revitalisation Enterprises Support (CARES) programme which is a GH¢100 billion project to be carried out in two phases aimed at stimulating the economy.
The first is the stabilization phase which aims at supporting enterprises recover.
These include paying outstanding obligations to contractors and suppliers; injecting liquidity into the system and ease the cash flow difficulties of businesses; developing another programme to support large business hard hit by the pandemic; and also sourcing from the pharmaceuticals and textile & garment sectors and expand procurement from local producers for its goods and services.
The second, which is the medium-term revitalisation phase, will also include initiatives such as supporting commercial farming by complementing the Planting for Food and Jobs and the Rearing for Food and Jobs programmes; providing targeted support to enable the private sector accelerate progress in building Ghana’s light manufacturing, technology, and digital economy sectors.
This phase will also make Ghana a regional financial hub by establishing an International Financial Services Centre (IFSC), as well as a regional manufacturing and logistics hub for the West Africa region; review of flagship programmes such as the 1D1F, free SHS and water and sanitation; enhance the business environment of the private sector through digitization, skills training, improvements in business regulations and their implementation, energy sector reform and expanding access to finance.