Some business owners have identified high utility tariffs as “the most important constraints” they have faced during first-half of the year, preliminary results from the 2021 business confidence survey (BCS) conducted by the Institute of Economic Affairs (IEA) have shown.
According to the business owners, high rates of taxes, incidents of corruption, an erratic exchange rate regime and the high cost of inputs make up the top-five constraints they face.
Commenting on results of the survey, which was conducted in third-quarter of the year and examined the prior two quarters, Senior Fellow at the IEA Theodore Markham noted that it offers cause for concern – especially as the Public Utilities Regulatory Commission (PURC) has hinted at reviewing charges upward.
He tasked the state to find ways to minimise wastage in the generation and transmission of water and electricity.
He also called for consideration of providing businesses with preferential tariff rates, saying the current regime is unfairly punitive toward productive activities.
“There are many factors behind the high utility tariffs, and one of them is the way government has distinguished between domestic and commercial and industrial users. The business community considers this discriminatory, and more must be done to encourage them.”
The survey was limited to the Greater Accra Region due to the ongoing pandemic, and saw responses from 157 businesses across the three primary sectors; albeit with a heavy bent toward the services sector, with wholesale and retail traders accounting for 60.5 percent of the respondents.
The survey showed that a reduction in the rate of taxes and charges, as well as the cost of credit, are the top interventions businesses want from the state.
Three in four business owners, the survey showed, do not expect a material change in their business performance over the course of the next six months – the yuletide period included.
Despite an almost 90 percent reduction in COVID-19-related expenditure during the period under consideration, respondents suggested that they had on average recorded net losses as the pandemic-related savings were eroded by increased costs of production, up 75 percent, and a reduction in profits by about 80 percent.
However, approximately 60 percent of businesses surveyed are “expecting a better business performance in the next six months”.
There were also expectations expressed that physical capital expenditure, sales and profits will see an upturn over the next six months, with the cost of operations dropping further.