The Chief Executive Officer (CEO) of the Private Enterprise Federation says although government is doing its best to support the private sector, its support is not enough to enable private businesses to recover from the adverse effect of the Covid-19 pandemic.
Nana Osei Bonsu speaking on JoyNews on Thursday stated that foreign businesses in the country are given tax incentives, thus shrinking the income stream of government to be able to significantly assist the private sector.
“Government is making effort. Are they enough? No. The efforts are not enough for businesses to do what they need to do. When talking about access to credit, finance and resources, you forget about our investment program in Ghana. We attract foreign businesses and they come in loaded with tax incentives. That is depletion of income stream to government for the future.
“They take profit margins at the end of the period, repatriate them home. That is depletion of resources within the country going out. What we lack as private indigenous businesses is access to long term pull of funding. Low-cost funding will allow us to be able to do what we need to do to become competitive. So when you look at government’s stimulus package which is a residual of what had happened, then you say government has given 600 million. Is it enough, no way.
“If you are talking about the economy and the status of our indigenous businesses, they are not receiving the necessary tools,” he said.
Interacting with George Wiafe on PM Express Business Edition, Mr Osei Bonsu explained that private businesses are unable to go for loans regardless of banks’ willingness to give them out because businesses have not fully recovered, do not have complete staff and a secure supply chain based on demand.
“We are recovering, we are still struggling because a lot of businesses have not fully recovered or almost 50 per cent yet. Some of their employees are still home, some of their patronages are still dwindling.
“If you take the credit what are you going to do with it when you are not certain whether you have the key staff who are going to work with you, whether you have the patronage from businesses that rely on and whether you have your supply chain certain to be delivered. So you may have access to credit but if you borrow, what are you going to do with it?” he noted.
According to him, the way forward is for government to consider looking at equity (the value that would be returned to a company’s shareholders if all of the assets were liquidated and all of the company’s debts were paid off).
Such an initiative he said will serve as a pool where businesses can tap in and share profits made, rather than go for loans with high interests.
“Equity is the way out. We have always been pushing credit. There is no competitive alternative. But if government were to assist like we did on Venture Captial Trust Fund, what did it do? Take government endowment, mix it with private sector equity and then create a pull of funding available to businesses to tap into that they don’t have to pay. We share the profit if we make money and they make money and they share the profit.
“So instead of getting a medium enterprise to go and borrow and pay at an expensive cost, you give them incentive that will allow them to rely on partnership arrangement, make money and split. That is the way to go,” he intimated.
