Towards economic stability: Bold, sustainable policies critical
THE economic challenges faced by businesses in Ghana throughout 2024 cannot be overstated. From soaring inflation and prohibitively high interest rates to a volatile exchange rate regime, these issues have crippled operations, eroded working capital, and stifled growth across industries.
As we approach 2025, it is imperative for policymakers and the incoming government to take bold steps toward achieving long-term economic stability and providing relief to businesses that remain the backbone of our economy.
High interest rates have been particularly detrimental. Access to credit is essential for business growth, yet the cost of borrowing has been insurmountable for many.
Small and medium-sized enterprises (SMEs), which account for a significant share of employment and productivity in Ghana, are the hardest hit. Without affordable credit, these businesses cannot scale up or contribute meaningfully to job creation and economic growth.
It is time for policymakers to implement measures that make borrowing more affordable, particularly for SMEs and local entrepreneurs.
Inflation, though on a downward trajectory, remains a silent menace. While the government has managed to reduce inflation from a staggering 50% to around 22%, the reality is that businesses and consumers alike are still burdened by high prices.
Compounded inflation over the last few years means that costs have continued to rise, leaving businesses unable to plan effectively and eroding the purchasing power of workers.
A deliberate effort to stabilize inflation further, coupled with policies to support productivity and domestic manufacturing, is necessary to protect livelihoods and reduce Ghana’s dependence on expensive imports.
The depreciation of the cedi further amplifies these challenges. From GH₵6 to the dollar in 2022 to over GH₵17 in 2023, the cedi’s sharp decline has crippled working capital, especially for import-dependent businesses.
Though recent gains in the cedi’s value to around GH₵14.5 provide some relief, the exchange rate remains volatile and unpredictable. A stable currency is a cornerstone of economic confidence.
To achieve this, Ghana must take steps to strengthen its export base, reduce reliance on imports, and promote investments that shore up foreign exchange reserves.
The task ahead for the incoming government is clear but challenging: bold, innovative, and sustainable policies must take precedence. Ghana needs fiscal discipline, an enabling environment for business, and a renewed focus on local production and industrialization.
Interest rates must be lowered to allow businesses to access affordable credit, inflation must be tackled at its root causes, and a proactive exchange rate management strategy must be implemented.
Ghanaians are resilient, and businesses have weathered significant storms in recent years. However, resilience must be matched with strategic leadership and sound economic management.
As we look to 2025, it is not enough to simply reduce economic pressures incrementally; there must be a fundamental shift in how we approach growth, investment, and economic stability.
The plight of businesses must be at the centre of the economic agenda. Without decisive action, the challenges of 2024 may linger well into the future. It is time to prioritize the needs of businesses, workers, and consumers alike to chart a path toward a stronger, more resilient economy. God bless our homeland Ghana and guide us through these uncertain times.
