Business confidence holds firm despite rising costs

Business confidence in Ghana remained positive in the second quarter of 2026, although rising operating costs, limited access to finance and increased competition from imported products continued to weigh on companies.

The latest Business Barometer from the Association of Ghana Industries (AGI) recorded a Business Confidence Index of 108.7 for the quarter, down marginally from 109.5 in the first quarter.

Despite the slight decline, the index remained above the 100-point threshold, indicating continued optimism among businesses. AGI attributed the resilience in confidence partly to improving macroeconomic conditions and growing optimism around the government’s economic reform programme.

The survey showed that 42% of businesses experienced improved performance during the quarter, while 47% reported no change. Only 11% indicated that their performance had deteriorated.

Expectations for the months ahead were more positive, with 72% of businesses anticipating an improvement in performance. Another 26% expected conditions to remain unchanged, while just 2% foresaw a deterioration.

However, persistent cost pressures remain a major concern for industry.

Electricity emerged as the biggest challenge, with 19% of respondents identifying the cost of power as a key constraint. This was followed by the cost of raw materials at 14%, multiple taxes at 12%, access to credit at 11% and poor road infrastructure at 9%.

The cost of electricity was identified as the leading concern across the manufacturing, services and construction sectors, as well as among small, medium-sized and large businesses.

According to AGI, electricity-related cost pressures remained elevated throughout the quarter, with businesses yet to see any immediate relief.

Access to finance also continues to constrain business expansion. Although private sector lending has increased, the association said the growth in credit has not yet translated into a corresponding improvement in activity across the real economy.

The challenge is particularly significant for the construction sector, where access to credit ranked among the three most pressing constraints reported by businesses.

AGI also raised concerns about the growing presence of imported products in the domestic market, warning that local manufacturers are losing market share amid what it described as an “unbridled influx of imports” and unfair trading practices.

The association pointed to smuggling, tax evasion and the misdescription of imports as some of the practices undermining local production.

It said some imported products are allegedly being classified as raw materials to benefit from a 5% concessionary duty rate rather than the applicable 20% rate, while some traders avoid taxes by bringing goods into the country through unapproved routes.

AGI warned that such practices are contributing to declining capacity utilisation across several domestic industries.

The wheat flour industry, for instance, has an installed production capacity of approximately 800,000 metric tonnes annually, but current production stands at about 320,000 metric tonnes, translating into capacity utilisation of roughly 40%.

The report further indicated that utilisation in the industry has declined from 57% in 2021 to 40% in 2024.

Other industries are facing similar challenges. Capacity utilisation in the washing powder industry is estimated at about 30%, while vegetable cooking oil producers are operating at approximately 76% of installed capacity.

The business environment was also affected by a modest reversal in the recent disinflation trend. AGI reported that average inflation increased from 3.4% in the first quarter to 4.1% in the second quarter.

The association cited the ongoing conflict in the Middle East among the factors contributing to renewed price pressures, alongside existing domestic cost challenges.

Despite these pressures, AGI maintained a broadly positive outlook for the second half of 2026, with expectations that continued macroeconomic stability will provide a stronger foundation for business activity.

It nevertheless cautioned that high energy costs, limited access to finance and competition from imports could continue to constrain the performance of local industry if they are not addressed.

The Q2 2026 Business Barometer was based on responses from businesses operating across Ghana. Manufacturing and services each accounted for 47% of respondents, while construction represented 6%.

Small and medium-sized enterprises made up approximately 90% of the sample, with large businesses and African Giants accounting for the remaining 10%.