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Ghanaian firms experience improved access to finance and electricity but challenges remain

Silvia Muzi's picture


The private sector continues to be a critical driver of job creation and economic growth. However, several factors can undermine the private sector and, if left unaddressed, may impede development.  Through rigorous face-to-face interviews with managers and owners of firms, the World Bank Group’s Enterprise Surveys benchmark the business environment based on actual experiences of firms.
 
This blog focuses on Ghana, where 720 firms were surveyed covering six business sectors—(i) Food, (ii) Chemicals, Plastics, & Rubber (iii) Basic Metals, Fabricated Metals, Machinery & Equipment (iv) Other Manufacturing (v) Retail (vi) Other Services.


Use of financial services for investments and working capital on the rise
According to the 2012 Ghana Enterprise Surveys (ES), 21% of firms used banks to finance investments (vs. 16% in 2007) and 25% used banks to finance working capital (vs. 21% in 2007). However, while access to financial services has improved, it is still lower compared to the average for around 135 countries with ES data. The corresponding global averages for bank finance for investments and working capital are 25% and 30%, respectively. Moreover, in Ghana, 23% of the firms surveyed had a bank loan or line of credit, compared to the global average of 34%.

 
 

Less frequent power outages but a rise in the use of generators
While electricity supply remains inadequate, Ghanaian firms experienced power outages that were less frequent and shorter in duration in 2012, compared to 2007. In a typical month in 2012, firms in Ghana experienced 8 power outages (down from 10 in 2007) compared to an average of 6 for all countries with ES data. The duration of outages also decreased to 7 hours in 2012 (from 12 hours in 2007) but remains high when compared to all countries with ES data (3 hours). At the same time, the percentage of firms that own or share a generator more than doubled compared to 2007 (27% in 2007 vs. 52% in 2012) and is currently higher than the global average of 34%.


Access to finance, electricity and customs & trade regulations are top challenges for Ghanaian firms
Access to finance was reported as the biggest obstacle to day-to-day operations by half of the firms in Ghana, up from one in every three firms in 2007. The second most cited biggest obstacle in 2012 was electricity, cited by 19% of firms, a significant reduction from 49% of firms in 2007. Additionally, customs and trade regulations were cited as the third biggest obstacle (7% of the firms), which is in line with firms’ experience with the deterioration of the efficiency in customs when importing inputs.
 

For a full range of indicators, please visit the Ghana ES survey web page in the Enterprise Surveys website. The raw survey data can also be obtained here after registration.
 
This post is from a blog series that shares highlights from the Enterprise Surveys conducted in several countries. Previous postings in this series are available below:

 
 

 

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