Business support policies should concentrate on re-establishing channels that were adversely affected by the pandemic – GSS

The Ghana Statistical Service (GSS) has stated that policies put in place to support businesses in the medium and longer-term should be concentrated on re-establishing channels that were adversely affected during the pandemic.

 “The results of the survey indicate that firms are affected by multiple channels at the same time. Reestablishing supply channels, access to finance, and access to foreign markets to boost demand will be crucial for firms to regain productivity”, the GSS said.

 The GSS further stated that policies can support the private sector in the recovery stage in several ways. Three avenues outlined by the Service include providing credit guarantee schemes for those accessing finance, assisting with input procurement, and facilitating trade.

Also, the GSS pointed out that efforts should also be made to help firms adjust to the “new normal” by improving firm capabilities to boost productivity.

According to the GSS, policies aimed at helping firms adjust to the “new” normal should be geared towards providing support to increase productivity through business development services, worker and manager training, and grant schemes to facilitate technological upgrading, including using digital technologies.

“Helping businesses adopt best practices can be expected to increase their productivity and resilience to future challenges”, the GSS added.

The Business tracker survey, wave 2 conducted by the Ghana Statistical Service (GSS) points to the fact that firms continue to experience a decrease in demand as well as difficulties in financing cash shortfalls putting many firms in a difficult position.

The results of the survey, according to the GSS, suggest that policies are needed to support firms both in the short- and medium-terms.  Many firms covered by the survey indicate that they were not aware of support programs, suggesting the need for increased awareness and clarity on the guidelines and requirements of current programs.

The survey reveals that Firms continue to report that measures at improving liquidity (subsidized interest rates, cash transfers, and deferral of payments) are the most desired policies.

The share of firms having received support almost tripled in the second round compared to the first round, with currently 9 percent of firms, up from 3 percent during the first-round survey, reporting that they have received government support.

The top three policies that firms desire in the second-round survey include loans with subsidized interest rates (67 %), cash transfer (41%), and deferral of rent payment (25%).

 In the first-round survey, these were also the most desired policies at respectively 61 percent, 32 percent, and 15 percent.

The results of wave 2 also show that Firms that desire access to new credit decreased from 14 percent to 11 percent while those desiring wage subsidies also decreased from 2 percent to 1 percent between the two surveys.

Firms desiring loans with subsidized interest increased from 61% in Wave 1 to 66.9% in Wave 2. The desire for cash transfer also increased from 32% in the first Wave to 40.7% in the Second Wave.

The share of firms reporting that they received support tripled, from 3 percent in the first wave to 9 percent in the second wave.

Awareness improved but remains the key reason why firms did not obtain support. During the first-round survey, a lack of awareness (35 %) is the predominant reason that firms indicate why they do not get support from the government. In the second-round survey, this percentage was 30 percent.

 About a quarter of firms (28 %) that have not received support indicate that they have applied but did not receive the funding yet. Nineteen percent (19%) of firms without support indicate that they did not apply because they thought they would not get it. Firms that indicated it was too difficult to apply, increased from 7 % to 18 % between the two waves.

The second round (Wave 2) was conducted between August 15 – September 10, 2020, following up on the first round conducted between May 26 – June 17, 2020. A total of 3,658 firms were interviewed as part of the second-round survey.