Policy rate increase will exacerbate challenges confronting businesses – GNCCI

The Ghana National Chamber of Commerce and Industry (GNCCI) has expressed concern about the increase in the policy rate by the Bank of Ghana to 29.5%, saying it will exacerbate the challenges confronting businesses in Ghana, resulting in higher borrowing costs and reduced investment.

This it believes will hamper growth and employment prospects, it disclosed in a statement signed by its President, Clement osei-Amoako

Additionally, the increase in the policy rate will also have adverse effects on consumer spending, exchange rates, and inflation expectations, consequently dampening the business climate in Ghana.

Furthermore, the proposed Excise Duty Bill and the Growth and Sustainability Levy Bill aimed at boosting government revenue will weigh heavily on businesses, posing significant obstacles to their performance, resilience, and sustainability.

In light of these concerns, the GNCCI advocates for policies that support businesses and help mitigate the negative impact of policy rate increase.

The Chamber’s proposals include providing targeted support for Small and Medium Scale Enterprises through financial aid and access to credit, as well as implementing measures that promote economic growth, such as increasing investment in infrastructure and other sectors.

Additionally, the Chamber is calling for a review of the policy rate increase and its negative impact on the economy to ensure alignment with the needs of businesses and the wider economy in Ghana, noting “importantly, macroeconomic policies (fiscal and monetary policies) must aim at strengthening the microeconomy and not weakening it”.

Furthermore, the Chamber believed that Ghana’s economic management challenges are partially attributed to an overemphasis on macroprudential programmes, and instead, the way forward lies in prioritizing microeconomic diligence by implementing competition laws, structures and path-walking. Value addition, export development and efficient competition laws are more sustainable tools needed to manage exchange rate and inflation stability.

The GNCCI furthered that it looks forward to engaging the Bank of Ghana, Ministry of Finance and other stakeholders to develop and implement prudent microeconomic programmes that can foster a resilient and inclusive environment for business and industrial growth.

“In this regard, the Chamber strongly urges the Bank of Ghana to avoid any further increases in the policy rate, as such a move could precipitate business failures, with dire consequences for the national economy. The Chamber’s commitment to promoting and protecting commercial and industrial interests in Ghana remains steadfast, and it recognizes the importance of exceptional macroeconomic prudence in the country’s journey towards becoming a developed nation.”