Chief Executive Officer (CEO) of the Ghana National Chamber of Commerce and Industries, Mark Badu-Aboagye, has indicated that the association deems the latest update in Ghana’s tariff rates as bad news and unfavourableto the country’s economic condition.
Speaking to Samuel Eshun on e.tv Ghana’s “Fact Sheet”, Mr.Badu-Aboagye reiterated that the association is not in any way against increment of utility tariffs, “Because water and electricity are key components or input in whatever activity that we perform and we also know that they’re also businesses that must survive and then sustain over medium to long term. So,we’re not against the increment per say.”
However, according to Mr. Badu-Aboagye, the association’s major concern lies ultimately in the timing of the announcement of the increased tariffs, considering the current economic environment the country is positioned.
He highlighted that every business needed at least three major factors to strive which included, “One is the economic environment, two is the regulatory environment and three is the micro level deficiency of the businesses. If you’re very efficient and no matter how efficient you are, if the economic environment is harsh, there is no way you’ll survive and at the moment it’s very harsh,” he explained.
“Inflation is very key and at the moment it’s 31.7%, the highest for the last 20yeats and every time inflation goes up those who feed into the producer pricing index which gives an average of the cost of production for a typical business at the moment is 38%. That is the producer price index and then we also come back to factors like depreciation. Our economy is an open economy and the structure is such that we import almost everything. In fact, even those that are manufacturing import the raw materials to manufacture. We have seen a depreciation of 30% of the Cedi since the beginning of the year. So, if you have 6.5% at the beginning of the year, as I speak some are buying it at 10 cedis, massive depreciation. It means that even if you’re a business without even performing any activity you’ve seen a depreciation of your capital to that margin,” he said.
“Now for a typical business, 30% of the cost is on utility also electricity. With the 27.15% it means that 30% is going to increase automatically and that of water will increase. So, the situation is being compounded by the increment at this time,” he added.
Mr. Mark Badu-Aboagye’s comment comes after the Public Utilities Regulatory Commission (PURC) on Monday, August 17 approved a 27.15 percent increase in electricity and 21.55 per cent increase in water effective September 1, 2022.
By: Jude Tackie