- November 29, 2021
- Posted by: Ato
- Category: Economics
Economic Governance Platform discuss private sector’s contribution to poverty reduction post-Covid
The Economic Governance Platform (EGP) has held a roundtable discussion on the economic growth pathways through which the private sector can contribute to the acceleration of poverty reduction in the post Covid-19 recovery period.
The Economic Governance Platform is the foremost coalition of CSOs focused on ensuring the efficient and effective use of public resources to grow Ghana’s economy.
Speaking to the theme, Felix Ankrah who is Programme Coordinator for the Economic Governance Platform, stressed the importance of the private sector in helping the government fight against poverty and ensure poverty reduction in the post Covid-19 era.
“Government needs to take advantage of Science, technology, innovation, digitisation and climate friendly strategies, and the partner they need to call upon is the private sector This is because private sector has the technical know-how, knowledge and the expertise to advance this development and also reduce poverty.
“I am urging government to partner the private sector in policy planning as well as implementation so that we can achieve our Ghana Beyond Aid and also reduce the lot that we’ve lost due to Covid and inequality post Covid,” he added.
Dr William Godfred Cantah, a lecturer with the University of Cape Coast Department of Economics in his presentation on the theme spoke about the development of the private sector from 2000-2020 and the contributions and pathways of the private sector towards poverty reduction in the country.
Speaking to the nature and the coverage of the private sector in Ghana, he noted the private sector had employed the larger chunk of the country’s labour force with the majority of those employed working in the services sector.
“The private sector in Ghana dominates activities in almost all sectors of the Ghanaian economy.The private sector accounts for over 90 percent of total employment in the country. Employment in the private sector is dominated by the services sector (mainly in the trade and commerce sub-sector) Activities in the private sector are largely dominated by small scale enterprises. According to the Integrated Business Establishment Report (IBES-2017), more than 85percent of business establishment in Ghana can be classified as Small and Micro scale enterprises (GSS, 2017).”
Further in his presentation, Dr Cantah spoke to the issues at hand with regards to the theme of the day bringing out policies that could revamp the private sector after the post Covid era.
“The private sector has proved to be very essential to the growth and development of the Ghanaian economy. It remains the largest employer in the economy, provides majority of tax revenue needed to finance national development etc. Hence any attempt to revamp the sector is akin to revamping the entire Ghanaian economy and push towards poverty reduction,” he noted.
One key challenge with the private sector even before the onset of the pandemic, the Economic Governance Platform notes, has been access to essential capital and credit that would help expand businesses in the private sector and this challenge was further exacerbated by the pandemic.
The Ghana Statistical Service COVID-19 Business tracker revealed that over 25 percent of firms reported declines in access to finance whilst about 16 percent indicated financial institutions had tightened their terms of loans making it difficult for them to have access to credit. Thus, revamping the private sector would require increasing access to the needed financial resources that would enhance the development of the sector.
The unwillingness of financial institutions to provide credit to MSMEs could be attributed to the high level of risk associated with the MSME sub-sector of the private sector, which is mostly as a result of information asymmetry (due to the lack of accounting records, inadequate financial statements or business plans makes it difficult for creditors and investors to assess the creditworthiness of potential SME proposals), insufficient asset and low capitalisation of these MSMEs as well as high administrative/transaction cost of lending or investing in these MSMEs tend to make financing very unprofitable.
Hence, tackling these challenges which are mainly associated with MSMEs, would increase their access to the needed financial resources needed to revamp their activities in the post-covid-19 era and make them more robust against future shocks.
Giving the closing remarks was Chairperson of the roundtable discussion and Executive Director of Penplusbytes, Juliet Amoah who also noted a few areas policy makers should tackle to help in poverty reduction.
“We do have to invest a lot of funding in data and digitisation so that it aids in decision making,” she said.
The Roundtable was well attended by key stakeholders including, government officials’ academics, representatives of civil society organisations, Business Community, members of diplomatic corps and the media.