THE AGI BUSINESS BAROMETER

3RD QUARTER 2009

SUMMARY REPORT

OVERALL PERCEPTION OF THE BUSINESS

CLIMATE
The overall business environment is perceived
by business people as unchanged in the last six
months, according to the 3rd Quarter Business
Barometer (BB) as recently conducted by the
Association of Ghana Industries (AGI).
83% of these companies have high expectations
that the business climate will improve in the
next six months. In this regard, service
companies are the most optimistic with an
estimated 90% affirming that business will be
better.

OVERALL MAJOR CHALLENGES

Cost of credit, inflation and access to credit
resurfaced as the three major challenges
confronting companies in Ghana today.

3rd Quarter 2009 Top Challenges

Cost of Credit

54%

Inflation

47%

Access to credit

46%

Depreciation of the Ghana Cedi

35%

Competition of imported goods

25%

Delayed payment for Gov. contract

Percent

Overall Business Perception Q3

90
80
70
60
50
40
30
20
10
0

High level of taxation

15%

Growing incidence of Crime

11%

43
Current
29

28

Expected

50

100

Percentage of companies mentioning this challenge

14
3

Figure 3
Same

Better

The prime rate has been kept stable in a bid to

control cost of credit, among others. Regardless
of this regulatory measure by the central bank,
companies still perceive lending rates as a
major barrier to accessing credit. Evidently,
there is the need for the central banks
intervention to cushion all businesses including
those that have a long term investment horizon
yet require credit.

Overall Business Perception Q2

80

71

70
60
Percent

19%

Export Marketing

Figure 1

45
39

40

Current

30

21

20
10

20%

Taxes on imported raw material

83

Worse

50

21%

16

Expected

SECTOR CHALLENGES

0
Worse

Same

Better

Figure 2

Figures 1 and 2 indicate overall business

perception for quarter 3 (Q3) and quarter 2
(Q2) respectively. A sizeable 83% are optimistic
of the business climate in Q3, compared to 71%
in the previous quarter. A few businesses also
think business will remain same in the next six
months. Yet 3% of businesses still expect a
worse business climate in the next quarter.

Manufacturing- Cost of credit and inflation

emerged as the key challenges facing the
manufacturing sector, many of which are
already under-capitalized.
Agriculture- Cost of credit and access to credit,
are key challenges facing the agricultural
industry which contributes over 50% to GDP.
For a sector that is pre-disposed to the vagaries
of the weather, accessing credit even remains a
more difficult task than envisaged.
Other industry (construction) - For these
industries cost of credit is a major challenge.
Service- Inflation and cost of credit are the key
challenges facing the service industry.

THE AGI BUSINESS BAROMETER

3RD QUARTER 2009
SUMMARY REPORT

THE BB INDICATOR (BBI)

Other challenges that the BB revealed
include:

COMPARISON: Q2 AND Q3 CHALLENGES

Results for Q2 and Q3 as featured below
indicate that the major challenges facing
businesses in Ghana today, cost of credit,
access to credit, inflation and depreciation of the
cedi still occupy the top four positions but in
different order.
3rd Quarter 2009 Top Challenges

Cost of Credit

Depreciation of the Cedi

47%

Inflation
Access to credit

High level of taxation

20%
19%

Export Marketing
Growing incidence of Crime

21%

Growing incidence of Crime

10%

Bureacracy of Government

9%

Corruption

50
Percentage of companies mentioning this challenge

100

40
35

43.4
37.5

36.8

30
25
20
15

12.5

10
5
0
Q3.07

Q4.08/1.09

Q2.09

Q3.09

Period
19

The BB indicator showed a downward trend

between Q4 of 2008 and Q2 of 2009, suggesting
an unfavourable business climate. The surge
between Q2 and Q3 reflects a recovery probably
from the global recession with the indicator
registering an appreciable 36.8 even though this
figure falls short of the threshold of 50.

Business Barometer Methodology

24%

Level of taxation

11%

45

27%

Quality of Power Supply

15%

50

32%

Competition from imported goods

21%

Taxes on imported raw material

42%

Access to credit

25%

Delayed payment for Gov. contract

48%

Cost of Credit

35%

Competition of imported goods

61%

Inflation

46%

Depreciation of the Ghana Cedi

2nd Quarter 2009 Top Challenges

54%

BB Indicators (unweighted) 2007-Q3 2009

BB Indicator

Decline in purchasing power and local

economic activities in general.
Access, availability, quality of raw
materials
and
inputs
needed
for
production.
Inadequate
protection
for
local
industries, exposed to competition from
foreign trade.

The current BBI stands at 36.8.The BBI is the

transformed mean of situation (current business
performance) and expectation (future business
performance). It ranges between -100 and
+100

7%
0%

50%

100%

Percentage of companies mentioning this challenge

27

Inflation maintained second position in Q2 and

Q3 BB as shown above, while cost of credit took
first position in Q3. Comparatively, the growing
incidence of crime and corruption are less
highlighted in Q2 and Q3. The recurring trendcost of credit, inflation, access to credit and the
depreciation of the Ghana cedi calls for
governments intervention.

The BB captures the current business climate in

Ghana. It allows short term forecasting and
provides valuable information to business
investors and government. The current AGI BB
is a replacement of the previous AGI Business
Climate Survey (BCS) and is conducted
quarterly. Sequentially, the results of the most
recent one become a baseline for the next
study. The methodology adopts standard
research procedures and follows international
best practice.
A total of 279 micro to big companies from
various
industries
across
Ghana
were
interviewed. The study was largely quantitative
in scope but also made provision for
respondents to express independent views.
Questionnaires were administered through faceto-face, telephone interviews and drop-offs.
WE THANK OUR RESPONDENTS FOR THEIR
COOPERATION