Ghana Business News – Minister for Business Development, Mr. Mohamed Ibrahim Awal has said that government is coming up with interventions aimed at strengthening local businesses to compete, including providing tax reliefs for start-ups.
Responding to concerns that government was pampering foreign companies with exemptions and reliefs to the detriment of local companies who have to compete with such foreign ones, Mr. Awal, who opened the Second Ghana SMEs and Young CEOs Summit, said government was not discriminating against Ghanaian companies but rather strengthening them to compete.
According to him, the Ministry would present draft legislation to Cabinet and subsequently Parliament in 2019, which will exempt Ghanaian start-ups from the payment of taxes for three years of its operations, and expected it to be passed in the same year.
This, he said, will allow start-ups to be able to invest in their companies to grow them.
“When you’re starting a business, you need capital. You can’t get the money and pay a lot of taxes, so if they get the money, they will not pay tax; it will be ploughed back into the business so that it can expand and employ people,” he stated, adding that all start-ups will enjoy this benefit.
He noted that aside from providing a good foundation for local businesses by addressing problems in the macroeconomic environment including inflation and high interest rates, government also supported over 1,350 Small and Medium Enterprises with loans ranging between GH¢10,000.00 to GH¢100,000.00 from the ministry at an interest rate of 10 percent over two years. The SMEs cut across sector like agribusiness, ICT and media.
In 2019, the ministry was aiming to support about 5000 SMEs and hoped to reduce the interest rate to about two percent over the next five years, in order to allow them the space to grow.
Mr. Awal added that the procurement law being worked on by government will also favour local companies by mandating that 30 percent of all procurement by the public sector be sourced from local companies.
Mr. Philip Abradu-Otoo, speaking on behalf of the Governor of the Bank of Ghana, on the current reforms in the banking sector, impact on SMEs and economic growth, noted that the banking sector was going through reforms and sanitization efforts which had required difficult decisions in some cases, in the larger interest of the society.
He said the recent happenings in the banking sector, which remained a critical backbone of the economy, underscored the need for constant and regular reforms in the sector, adding that a review of the circumstances leading to the collapse of the seven banks showed weak corporate governance structures, insufficient disclosure and transparency on the financial health of banks, critical gaps in the regulatory framework and poor supervision among others.
He noted, however, that the passage of the Banks and Special Deposit-taking Institutions Act (Act 930) had provided additional tools to deal strictly with ailing institutions and enhance supervision, adding that the reforms in the sector were yielding positive results, including banks adopting best practices in corporate governance and risk management.
“The Central Bank is confident that the banking landscape and way of conducting business will not be the same following completion of recapitalization efforts and banks’ efforts to instil new corporate governance structures,” he stated.
Ms. Kosi Yankey, Executive Director of the National Board for Small Scale Industries (NBSSI), who represented the Minister for Trade and Industry at the Summit, said the ministry was working on a National Micro, Small and Medium enterprise policy, which will help drive and address challenges in the sector.
She said the document was in its final stages of preparation and once finalized, will ensure that the challenges faced by SMEs are addressed to enable them deliver their mandate of creating jobs for the youth and driving the Ghana beyond aid agenda.
Mr. Ernest De-Graft Egyir, Chief Executive Officer of the Chief Executives Network Ghana Limited, said the theme of the Summit: “Corporate Leadership Governance and Technology: Strong Pillars for Business and Economic Growth”, was important especially as the voluntary nature of the Corporate Governance Code had made compliance with standards slow.
While commending government for the establishment of the Ministry for Business Development, he called for it to be repositioned as a ministry of SME Business, to oversee a 10-year SME master plan.
“We believe that the 10-year master plan will trigger major paradigm and structural shifts towards an entrepreneurial economy,” he stated.
He told the GNA, that going forward; the Summit will also increase the representation of young CEOs and start-ups to give them the opportunity to learn from accomplished SMEs.