Local business associations have begun agitating following Government’s delay in releasing the stimulus package earmarked for local companies in distress.
Government announced early this year – 2017, that it will offer stimulus packages to local companies that have been in distress for a number of years now.
Businesses in distress
A number of challenges including unstable power supply, high tariffs, forex exchange fluctuations and high cost of credit pushed many companies into distress leading to massive job losses.
According to the Association of Ghana Industries (AGI)’s 2016 fourth quarter business barometer report for example, high cost of credit, multiplicity of taxes, cedi depreciation and high cost of utility were the top challenges confronting businesses in Ghana.
The package is expected to put the companies back on track following the challenges.
50 million dollars have been allocated as seed money to support the beneficiary businesses, while an additional 150 million dollars is expected to be allocated to support businesses that will be selected based on a rigorous vetting process.
President Akuffo-Addo stated in July, 2017 that 80 companies had been approved by government to benefit from the stimulus package, after 285 applications were received.
“The asempa budget also provided the fifty million dollar stimulus package for the revival of distressed industries and companies. At the end of June 2017, 285 applications had been received. So far one hundred and eighteen have been screened in which eighty have been adjourned eligible for various stimulus packages.”
“In addition to government’s contribution an amount of twenty million dollars is being ear marked by local financial institutions as part of the stimulus package this will definitely help in the revival of our industrial sector under minister for trade and industry Alan Kyeremanteng.” he added.
Delay in disbursement
But nine months after its announcement the businesses are yet to receive the package.
One of the business operators who spoke to Citi Business News on condition of anonymity said ‘my company was approved to receive the stimulus package it’s been six months …..nothing, it is worrying we have to have this money to revive our business or its will go down totally.’
Chief Executive Officer of AGI, Seth Twum-Akwaboah, speaking during a staholder engagement with Government on the 2018 budget said the delay is further worsening the plight of distressed companies.
‘The stimulus package, is yet to really have an effect on the ground. I know the process is going on but industry is yet to have it. I know there was some provision in this year’s budget but we are not too sure if the release has been finalized so industries can actually take the funds to stimulate their operations so that is something we need to look at and we are already in the ninth month of the year so it means that we are actually delayed as far as targets are concerned’. He stressed.
Government had in June announced that the disbursements will commence in the middle of the year.
It’s unclear what is causing the delay in disbusment but industry has warned there will be more job losses if companies in distress are not attended to anytime soon.
By: Vivian Kai Lokko/citibusinessnews.com/Ghana