FABAG warns ECG tariff hike will collapse food businesses

The Food and Beverages Association of Ghana (FABAG) has strongly opposed proposed increases in utility tariffs, warning that such a move would cripple businesses and undermine the government’s flagship 24-hour economy policy.

The Electricity Company of Ghana (ECG) has proposed a sharp upward review of electricity distribution charges, seeking an average 224 per cent increase in the Distribution Service Charge (DSC1) over the 2025 to 2029 tariff period.

In a statement issued on Sunday, 14 September, FABAG said the planned tariff hikes, particularly by ECG, would worsen the already dire situation facing businesses in the country, especially in the food and beverages sector.

According to the association, sales in the sector have dropped by as much as 70 per cent due to current economic challenges, including the depreciation of the cedi.

Many restaurants, hotels, wholesalers and retailers are reportedly recording near-zero sales daily.

“The business sector is at a standstill. Food may be a necessity, but people are simply not buying,” the statement noted.

FABAG cautioned that any upward tariff adjustment would lead to higher production costs, job losses and the collapse of small businesses such as cold stores, bakeries and local restaurants, many of which are already struggling to survive.

“The food and beverages sector is one of Ghana’s largest employers and heavily depends on electricity and water. Increasing tariffs will wipe out thin profit margins and force many SMEs to shut down,” the statement indicated.

The group also warned that the hikes could trigger inflationary pressures, pushing prices of essential goods like bread, kenkey, water and beverages even higher.

Transport fares, it said, may also increase, further burdening households.

FABAG expressed concern that the proposals could derail the government’s 24-hour economy initiative, which aims to boost continuous business activity and industrial growth.

“Utility costs are a major part of food, transport and housing, the key drivers of inflation in Ghana. Increasing tariffs now will unleash a new wave of price hikes that will hurt households and slow economic growth,” it stressed.

While the association said it supports cost-reflective tariffs in principle, it insisted that any increases must be fair, gradual and tied to performance improvements by utility providers.