The Association of Ghana Industries (AGI) says over 70% of companies are optimistic that business situation would improve in the next six months.
In its research on assessing the impact of COVID-19 on businesses in the country, the AGI said by June 2021, 80 % of businesses expected recovery from the negative impact of COVID-19.
“There is a significant recovery for all the sectors and groups by size with different magnitudes. The service sector is recovering faster and construction is moving back slowly to normal,” Seth Twum Akwaboah, chief executive officer of AGI, said at the presentation of the report.
The research showed that 89 % of businesses were negatively affected by COVID-19 while overall about 75% of firms across all sectors scaled-down production in the year.
Presenting the findings of the research, Twum Akwaboah said the scaling down of production was marginally higher with small firms and African giants.
He said the majority of the firms were operating between 25% and 50%, adding that there was a steady decrease in the sales turnover over the past three quarters.
Between the fourth quarter of 2019 and the second quarter of 2020, there was a general decrease of more than 60 % in sales turnover across all business sectors.
The research showed that a highly significant majority of companies, representing 81 per cent were unlikely to meet their revenue target this year.
However, the reality is more pessimistic for the construction sector with only seven per cent that could meet this year’s target, Twum Akwaboah said.
In the second quarter of the year, about 60% of the companies experienced worse business situations.
However, the third quarter saw 17% returning to normalcy and nine per cent saw an improvement in their business situation.
On the likelihood of employing and investing, Twum Akwaboah said about one-quarter of companies planned to hire more workers in the next six months with construction posing marginally higher 30 intention to hire.
However, there is a higher proportion of 44% that planned to make new investments.
It is very likely that 45% of firms will replicate laying off of workers with almost the same proportion as in 2020 if the pandemic persists, the research showed.
Twum Akwaboah said among the top 10 challenges of business during the period included cash flow constraints, lack of orders, high cost of available supplies, difficulty in paying staff and market for goods and service.
He said firms were still expecting the government’s stimulus package, tax waivers or temporary tax break with flexible loans from commercial banks.
“Tax waivers or temporary tax breaks, stimulus package from the government, reduction of corporate tax, flexible loans from commercial banks, electricity and water subsidies are in this order the most important things firms expect to alleviate the impact of COVID-19,” he said.
To improve revenue, firms consider the adoption of new marketing strategies, tax relief from the government and investing in infrastructure as the three most important decisions to implement.
The broad objective of the study supported by BUSAC Fund was to ascertain the impact of Coronavirus pandemic and the restrictions on industry and also assess the business confidence level for the third quarter of 2020.
It was also to evaluate the impact of the pandemic on input supply, output, workforce and projected annual revenue and ascertain how SMEs can build resilience and local production capacity for AfCFTA by next year.
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