The outbreak of the novel corona virus disease (COVID-19) has disrupted every aspect of human life (economic, physical, and mental well-being). The risk to global economy is severe. Around the world, national economies have been faced with disruptions in economic activities and Ghana is no exception. The manufacturing, tourism and hospitality and transportation are among the hardest-hit. This has resulted in shutdown of some factories, lay-offs, short-time working, redundancy and disruptions in global value chain.
To curtail the spread of this deadly virus requires drastic, decisive and proactive measures. At this defining moment, health measures remain the first priority for governments, businesses and society. Showing solidarity and working together to protect staff, customers, and local communities is key in curbing the spread. The Ghana National Chamber of Commerce and Industry (GNCCI), therefore, fully support the partial lockdown of the epicentres of the disease in Ghana. Uncomfortable as this lockdown may be, the Chamber urges its members in the affected areas to adhere strictly to government’s directives.
The COVID-19 pandemic and its associated impacts including lockdowns have had dire consequences on businesses, more especially Small and Medium Enterprises (SMEs) in Ghana. The contribution of SMEs to Ghana’s socioeconomic development cannot be overemphasised. Therefore, any adverse effect that threatens the continued viability of SMEs will have a far-reaching and irreversible damage to the Ghanaian economy.
To salvage the situation and ensure that the Ghanaian economy is back on track in the not too distant future, government in consultation with key stakeholders have announced certain key measures to mitigate the impact of COVID-19 on businesses. Prominent among the measures are:
- A reduction in the monetary policy rate from 16 percent to 14.5 percent and a 2 percent reduction of interest rates on the Ghana Reference Rate (GRR);
- A GHS 1billion stimulus package to support businesses, more especially SMEs
- a syndication facility of GHS3 billion to support industry especially in the pharmaceutical, hospitality, service and manufacturing sectors;
- six (6) month moratorium of principal loan repayments for selected businesses;
- extension of the deadline for the filing of taxes from 4 months to 6 months after the end of the basis year;
- possible reduction in the cost of data and telecommunications to households and businesses; etc.
As the representative organ of the business community in Ghana, the Ghana National Chamber of Commerce and Industry (GNCCI) fully supports these measures and commends government on the initiatives undertaken thus far. The stakeholder consultation remains crucial to our collective efforts in fighting this pandemic and its adverse impacts.
The GNCCI urges government and the Bank of Ghana to continue to work with stakeholders to ensure that the announced measures achieved their intended purpose. More work needs to be done in some specific areas including the following:
- The Bank of Ghana must work with the Commercial Banks to ensure that the reduction in policy rate actually translates into reduction in the lending rates thereby minimising the cost credit to business. We all know the tenuous relationship between Policy rates and lending rates. This is the time for the policy rate to be effective in affecting lending rates.
- The stimulus package should be linked to industrial value chains for operational resilience. It must be used to strengthen thebackward and forward linkages necessary for industrial growth while addressing the interconnected risks within an industry. Government must adopt a holistic approach in designing and disbursing the stimulus package. Government must swiftly provide clarity on the intended beneficiaries of the stimulus package, the qualifying criteria and arrangements for providing the supports. The Chamber is ready to work with government to ensure a fair and transparent disbursement of the fund to deserving beneficiaries.
- There is also the need for further short- to medium-term strategy that deploys fiscal, monetary, tax policy (tax incentives) and trade policy to keep businesses running, prevent lay-offs, and protect vulnerable workers. In the medium-term, a coherent plan must be developed to support the hardest-hit industries, build resilience of the domestic value chain and prepare the country for the next unknown pandemic or economic shock.
Now is the time to encourage domestic production given the global disruption of international trade resulting from COVID-19. We must continuously find innovative ways of supporting our domestic firms. The GNCCI will continue to work with government and other stakeholders in promoting and protecting commercial and industrial value chains in the country. Let us all support government’s initiatives to contain the spread of COVID-19 by adhering to the preventive measures. The Chamber urges its members and the business community to continue their voluntary contributions to the COVID-19 Fund.