The rising cost of shipping goods is having a negative impact on businesses, particularly small and medium enterprises (SMEs) as well as consumers, Finance Minister Ken Ofori-Atta has said.
The situation, according to him, stems from the harsh effects of the Coronavirus pandemic that hit the country and other global economies last year, causing some challenges in global supply chains.
“The pandemic triggered a sharp and heavy slump in global supply chains, as the lockdowns and restrictions led to reductions in demand and production levels. The pick-up in demand for goods this year has also created a new inflationary problem with the consequential rise in cost of shipping, disruption of the global supply chain – exacerbated by the increase in world fuel prices.
“The spiralling costs of shipping have hit businesses hard, particularly small and and medium scale enterprises. SMEs have had to struggle with economic fallout from the pandemic, and furthermore they are now being forced to cope with the rising cost of shipping. This is making the lives of traders and consumers very difficult.”
The minister said this in the 2022 budget statement presented to Parliament last week, themed ‘Building a sustainable Entrepreneurial nation: Fiscal consolidation and Job creation’.
Mr. Ofori Atta further indicated that regardless of the situation, government has since last year rendered support to the citizenry, including businesses, to minimise the hardship.
“The hardship Ghanaians have experienced due to COVID is not lost on government. We have been there with the people, playing the difficult but necessary balancing act of managing an economy put under extreme distress by the pandemic and, at the same time, supporting households and businesses to cope. We empathise with business owners who lost earnings due to the slump in businesses built around our traditional and other social events,” he added.
Over the years, entrepreneurs in the country have complained bitterly about the high cost of production resulting from the cost involved in importing raw materials. This subsequently makes the cost of finished goods too high for consumers to bear.
Mr. Ofori-Atta also noted that certain policies that government put in place to provide relief for Ghanaians during the pandemic, coupled with a drop in revenue collection last year, are major contributing factors to the rising public debt.
“The fiscal policies implemented to provide relief during the pandemic have led to an increase in total public debt. The situation was made worse by the big drop in revenue collections last year. Total revenues in 2020 fell by GH¢11.93billion, equivalent to 3.1 percent of GDP; while total expenditures increased by GH¢14.08billion, equivalent to 3.7 percent of GDP.”
He also assured government’s commitment to getting the economy back on track. “Let me assure the House that we are working hard to quickly get back to the pre-pandemic fiscal and debt trajectory.”