Ghana over-focuses on single-digit inflation – AGI

On Oct 29, 2013

Nana Owusu-Afari - AGI President — Nana Owusu-Afari – AGI President

The umbrella body for Ghanaian industries has called for a move away from the country targeting inflation at a single-digit rate.

According to the Association of Ghana Industries (AGI), the country’s economy has been hinged on bringing inflation down using the inflation targeting model.

The Ghana government has set a 9% inflation target for 2013.

“I believe that as a country, we have perhaps over-focused on bringing inflation down, using the inflation targeting model,” AGI President Nana Owusu-Afari said last week during the launch of Bank of Ghana’s 5th Foreign Private Capital Flows (FPCF) Survey in Accra.

In 2007, the BoG formally declared itself an inflation targeting central bank as part of its monetary policy practices

But Mr Owusu-Afari said “this has not helped” explaining that “when inflation was at a single-digit, interest rate[s] never came down”.

He continued “we all thought the macroeconomic policies will help stabilize the cedi but this did not happened as the cedi depreciated by about 20% last year.”

Mr. Owusu-Afari stated that the country’s import bill continues to exceed export revenue.

From the private sectors perspective, the AGI thinks the country has “not seriously researched to find out the underlying problems facing the economy”.

According to the association, small and medium enterprises (SMEs) in Ghana are unfortunately undercapitalized and can hardly borrow at the prevailing lending rates to grow their businesses.

Aside high lending rates, the AGI boss noted that local industries are also under pressure from rapidly emerging global markets which manufacture at lower costs.

Mr Owusu-Afari said he is convinced that the Ghanaian economy would see significant growth if Government gives additional support to the private sector while making manufacturing viable enough to attract foreign direct investments.

He therefore called on Government to institute necessary production incentives to scale up manufacturing industry‘s contribution to GDP.

By Ekow Quandzie