The Association of Ghana Industries says over 70 per cent of its member countries are optimistic that the business situation would improve within the next six months.
In its research report on assessing the impact of covid-19 on businesses in the country, the Association said by June 2021, 80 per cent of businesses expected recovery from Covid-19’s negative impact.
“There is a significant recovery for all the sectors and groups by size with different magnitudes. Service sector is recovering faster and construction is moving back slowly to normal,” Mr Seth Twum Akwaboah, the Chief Executive Officer of AGI, said at the presentation of the report.
The research showed that 89 per cent of businesses were negatively affected by Covid-19 while overall about 75 per cent of firms across all sectors scaled down production in the year.
Presenting the findings of the research, Mr 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 at between 25 per cent and 50 per cent of their installed capacity, adding that there was a steady decrease in 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 per cent 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 targets this year.
The construction sector is the worst hit with only seven per cent expecting to meet their revenue targets this year, Mr Akwaboah said.
About 60 per cent of AGIs member companies experienced a downturn in their respective business situations during the second quarter of this year when government imposed several socio-economic restrictions to curb the spread of COVID 19.
However, the third quarter saw 17 per cent of them returning to normalcy as government began a phased removal of those restrictions and nine per cent saw an improvement of their business situation.
On the likelihood of employing and investing, Mr Akwaboah said on average about one quarter of the companies planned to hire more workers over the next six months although such intent is higher in the construction sector where 30 percent of companies plan to hire more workers. .
An even higher proportion of companies surveyed – 44 per cent – plan to make new investments.
However, 45 per cent of firms surveyed say they will lay off workers – with almost the same proportion as in 2020 – if the pandemic persists, the research showed.
Mr Akwaboah said the top 10 challenges to businesses during the period included cash flow constraints, lack of orders, high cost of available supplies, difficulty in paying staff and lack of market for goods and service.
He said firms were still expecting the government’s stimulus package, tax waivers or temporary tax breaks with loans on flexible terms from commercial banks.
“Tax waivers or temporary tax breaks, Stimulus package from 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,” Mr Akwaboah said,
To improve revenue, firms are considering adoption of new marketing strategies, expecting tax relief from government and are considering investing in infrastructure as three most important things to positively implement their fortunes.
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 3rd quarter 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 to exploit AfCFTA by next year.