How Rising Cost Is Killing Productivity

Industry players have expressed concern over the rising cost of production for the private sector, especially the manufacturing sector.

Aside battling the challenge of high interest rates, access to regular power supply for their operations still remains a mirage in the face of the current shortfall in national energy supply.

The Chief Executive Officer of the Ghana Chamber of Commerce and Industry (GCCI), Mark Badu- Aboagye, explained to the GRAPHIC BUSINESS on September 25 that the private sector players in industry were in dire straits now.

�The private sector is suffering, especially those into manufacturing. It is much more difficult to get power now, and also the issue of rising utilities comes to play in their operations,� he stressed.

The concerns of the association of business operators, firms and industries set up to promote commercial and industrial interests in Ghana come on the back of the rise in producer inflation to a record high of 48.3 per cent in August 2014.

This inflation from the producer�s perspective, expressed in Producer Price Index (PPI), measures the average change over time in the prices received by domestic producers for their goods and services.

Producer inflation was largely pushed by the utilities sub-sector. It recorded the highest year-on-year producer inflation rate of 75.8 per cent.

According to him, a rise in producer inflation indicated that the cost of production in industry was rising and that came with its own attendant effects.

�The rise is a fair reflection of what pertains in industry. Cost of production is so high now because the rate has been going up for some time now. Industry has started laying off workers in order to stay in business and make some profit,� he said.

Breakdown of Producer inflation

The mining and quarrying sub-sector recorded the second highest inflation with 50.7 per cent. The manufacturing sub-sector recorded inflation of 41.9 per cent.

Also, the inflation rate for the petroleum sub-sector increased to a record 77.3 per cent in July 2014 as a result of increases in petroleum prices, but it declined to 68.6 per cent in August 2014 due to base drift effect.

Way forward for industry

The GCCI CEO said it was imperative that the government put in measures to improve the business climate for the private sector to thrive.

�There should be 24/7 supply of power for industry, infrastructure for transportation should also be in place for the business operators,� he added, stressing that the Chamber was ready to partner the government in that direction.

Source: Graphic Online