The Chamber of Commerce and Industry France Ghana (CCIFG) in collaboration with KPMG organised a Business Breakfast on the 2018 Budget and its Implication on businesses, on Thursday 12th April, 2018 at the Best Western Premier Hotel.
In conjunction with KPMG, The Chamber of Commerce and Industry France Ghana (CCIFG) organised a Business Breakfast meeting to give participants an understanding of the 2018 Budget, its implications and opportunities for businesses across sectors.
Attended by 70 business executives comprised of both members and associates of the CCI France Ghana, the event was facilitated by Robert Dzato, KPMG’s Financial Services Strategy & Operations Lead in Ghana. The presentation begun with, Mr Dzato, sharing the global economic outlook, saying the world economy growth will be led by emerging markets growth. The global economic growth has been influenced by a number of geopolitical events; including but not limited to the rise of nationalisms and trade wars, terrorism, Brexit amongst others.
Giving a macroeconomic overview of Ghana and comparing 2016 to 2017, he highlighted that the country is coming from a difficult recent past towards a period of stability, however the macro fundamentals need to be sustainable. He mentioned that, based on the 2018 Budget Statement, 2017 saw a positive GDP growth of 7.9% with 6.8% projected for 2018 against 3.7% (2016). Nevertheless, the Government’s growth projection could be more ambitious, not less than 7% for 2018.
The Fiscal deficit dropped from 8.7% in 2016 to 4.6% in 2017 with 4.5% projected for 2018. On price stability, he indicated the 2016 exit inflation rate of 15.4% dropped to 12.4% in 2017 with 9.8% being projected for 2018. On monetary policy rate, he indicated that albeit the rate has reduced by 450 basis points to 20% as at the end of 2017, the lending rates of banks remain stubbornly high and there is no “pass-through” in lending rates to the real economy due to high non-performing loans in the banking industry.
According to Mr Dzato, the size of the Ghanaian economy is estimated at GHS 202 billion, led by the services sector, which accounts for 53.4%. Industry and Agriculture account for 23.6% and 23% respectively. The Budget themed “putting Ghana back to work” is focused on job creation and growth.
On the 2018 fiscal outlook, he mentioned the Government is targeting revenue of GHS 51 billion with tax revenue contributing 79.4%, non-tax revenue 15.9% with other sources accounting for the rest. On outflows, Ghana is projecting GHS 62 billion with projected fiscal deficit of 4.5% for 2018. He noted that compensation and interests will account for circa 55% of Government’s expenditure in 2018, leaving only circa 11% on capital expenditure on critical infrastructure.
Based on a pre-budget survey conducted by KPMG comparing concerns of the business community in 2017 to 2018, there were a number of issues affecting businesses. In the survey, which gathered views of business leaders (CEOs and CFOs), utility costs; cost and access to credit; taxes and levies and the volatility of the cedi were the major concerns of businesses. He stressed, while there has been a number tax reforms and initiatives in 2017 and 2018 Budgets, challenges remain across sectors of the economy. Touching on recapitalisation of banks, he indicated the need for local banks to be strong to support the transformative projects in the economy.
He pointed out critical imperatives that should drive accelerated growth. These include digitalisation of the economy to achieve efficiency; encourage lending to the real economy (SMEs) at lower interest rates; investing critical infrastructure; driving public sector efficiencies; diversifying the economic (ensuring non-oil growth); depoliticising flagship national initiatives and building core institutional capacity as enablers.
The presentation was then followed by a very engaging questions and answers session which gave participants the opportunity to raise issues and concerns. Responding to questions from participants, Mr Dzato noted the growing influence of fintechs in Ghana.
Mr Sam Aluko, the KPMG lead on technology advisory, said business models are being reshaped and business leaders need to pay attention to disruptive technology. This will enable them take advantage of opportunities in the market place.