Even with no cure in sight and threats of a second wave of COVID-19 infections, 80 percent of businesses are expecting to return to full recovery by June 2021 – while only 26 percent are likely to hire new workers in the next six months, a new study by the Association of Ghana Industries (AGI) has revealed.
The report, ‘Assessing the impact of COVID-19 on businesses in Ghana’, said 71 percent of businesses are confident of an improvement in their operations over the next six months, with 23 percent saying the status quo will remain same while six percent expect the current situation to deteriorate.
AGI’s Chief Executive Officer, Seth Twum Akwaboah, who presented the report’s findings in Accra, said the majority of firms studied are optimistic about the business’s future though investment levels are expected to be low.
Of the businesses sampled – largely manufacturing firms, 89 percent also said they had been negatively affected by the pandemic; meanwhile, 5 percent have not been affected while 6 percent have been positively impacted.
Whereas 75 percent of firms scaled-down production as a result of the COVID-19 pandemic, production cuts were marginally higher with small businesses than African giants – those with operations in other African countries.
During the second quarter, which was marked by a lockdown of the country’s two busiest economic cities, Accra and Kumasi, 60 percent reported having experienced their worst business situation. However, the third quarter saw 17 percent returning to normalcy, with 9 percent seeing an improvement.
In terms of employment, 38 percent said they laid-off workers, 28 percent resorted to salary cuts, and 23 percent implemented mandatory leave directives as COVID-mitigating measures.
Revealingly, while 7 out of every 10 medium-size firms have insurance cover, 8 out of every 10 for large ones and 9 out of 10 for African giants, the majority of small businesses – 74 percent – do not have any form of insurance protection.
To support firms across the various sectors operating below normal capacity to recover from the slow-down caused by the pandemic, the report advocated tax waivers or temporary tax breaks. It also said stimulus packages must be expanded to include all sizes of businesses, in addition to flexible loans and measures to eliminate delays encountered by businesses when clearing goods at the ports.
“The capacity to export seems weak. This calls for effective implementation of the National Export Development Strategy to build local production capacity toward exporting goods and services in order to leverage the AfCFTA. Currently, about 90 percent of AGI member-companies only serve the domestic market,” Mr. Akwaboah said.
“Government must make a dedicated effort to scale-up and ensure policy-driven local content in contracts and procurement across key sectors. This will help stimulate demand for goods/services to speed up recovery while developing local supply chains,” he further advocated.
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