President Akufo-Addo’s financial reforms to make Ghana business-friendly.
Since entering office, President Akufo-Addo has reiterated his commitment to turnaround the country’s economic fortunes and expand the financial sector. Despite his administration entering at a time when the banks are facing tough times, impeding their growth and their ability to support industrial growth, the policies being enrolled by his team are meant to deepen investor confidence. “Well, I think you can see the impact of the dawn of the new government especially by the renewed sense of optimism from the people,” said Emmanuel Boakye, Director, Bank of Ghana (BOG). “You can already see a change on the macroeconomic front with the consistent decline in inflation, now at 12.1% down from 15%, plus the exchange rate for the cedi also.” While inheriting a large debt from the previous government, President Akufo-Addo’s reforms have already begun to make their mark of cutting that debt down all under the hopes of building the “most-business friendly and people-friendly economy in Africa.”
To boost growth, the government has re-oriented fiscal policy from a focus on taxation to a focus on production. With over 15 taxes abolished in a few short months, it’s clear that Ghana is looking to create opportunities that will lend themselves to foreign investment. “Beyond having opportunities you need to have the right enabling environment, in terms of taxation, policies and protecting investors,” claims Valentina Mintah, CEO, West Blue Consulting Group. “As you can see, the Ministry of Finance hit the ground running with those nuisance taxes that were removed.” Furthermore, the administration has indicated that clearance of goods from Ghana’s ports will be 100% paperless while all internal customs barriers in the country will also be removed to facilitate the movement of goods. These removals of red tape are all positive signs towards a country ready to move forward.
Ghana’s efforts to focus on the private sector to boost the economy and financial sector has brought about transparency and accountability, allowing industry leaders to have their say. “Even before they took office during the transitional period, they had a finance summit, where they invited key players in the business community to brainstorm and forge a way forward for our country,” details Kofi Adomakoh, Barclays Ghana Executive Director, “I’m happy to note that some of the suggestions that came out of these meetings have been implemented. For me, it demonstrates that they mean what they say and it can only get better.”
Maintaining a stable macroeconomic environment in the context of a growing economy is fundamental to attracting private sector investment and these are the main goals for jumpstarting the country. As a result of this “period of uninterrupted government, it makes it easy for us to execute our plans,” states Mike Nyinaku, CEO, Beige Capital. “We remain focused on the direction that we set for ourselves and it makes us just go because the climate also has been fair to us.”
Other specific measures fundamental to the financial sector have been introduced as well. ‘The National Identification Scheme’ project addresses the non-performing loan problem by feeding into our credit referencing arrangement to, more effectively, scrutinize applications for loans in the sector,” states Bank of Ghana’s Boakye. The National Digitisation, which maps out and inputs a proper address system, is very advantageous to the financial sector, allowing greater accountability and tracking. With measures in place to reduce the fiscal deficit to 6.5% this year while capping earmarked funds to 25% of government revenue and realigning expenditures to government priorities, the country is on the pathway to fiscal consolidation, debt sustainability and growth.
To promote the growth and development of entrepreneurship and to accelerate youth job creation, President Akufo-Addo has introduced the National Entrepreneurship and Innovation Plan (NEIP). Essentially, it’s the government’s approach to stimulate enterprise activities and provide integrated national support for start-ups and small businesses. “There are a lot of unemployed youth who could be employed,” states Dr. Aaron Issa Anafure, CEO of SIC Life, “not directly by government but with their help, they can fund them to set up their own businesses. I am happy to see that it has begun with this administration.” The Plan would enable new businesses to emerge, receive financing and to tap into a wide supply chain and network during their growth years, ultimately helping to create jobs at a national level.
“In Ghana, you are comfortable because you know that at the end of the day your investment is safe, especially with these new business-friendlier reforms,” affirms Kate Quartey-Papafio, CEO of Reroy. By restructuring the institutions of governance and rationalizing the financial sector to support growth in agriculture, manufacturing and industry, Akufo-Addo’s administration plans to restore fiscal discipline and macroeconomic stability are on the path to making Ghana the most “business-friendly economy in Africa.”