The Association of Ghana Industries (AGI) last week released its Business Barometer Survey for first quarter of 2011. The survey, which is conducted quarterly since 2010, measures the level of business confidence and predicts short-term business trends.

The first quarter report, which covered the period January to March, puts high cost of raw materials as the major challenge facing businesses in the country, followed by high level of taxation, and access to credit respectively.

High utility prices, low purchasing power, cost of credit, and lack of market for products also featured prominently in the result, with competition from imported goods, lack of finance and delayed payments completing the overall top ten challenges of businesses in Ghana for the period.

AGI president, Nana Owusu-Afari, described the situation as disturbing and called on government to immediately address these challenges to prevent loss of market share of local businesses to foreign companies through increase in imported goods.

This notwithstanding, the general outlook of the survey indicates that the business community is highly optimistic of better business performance in the second quarter of the year. Over 65% of the chief executive officers and business owners interviewed were confident that their performance will significantly improve in the next three months.

The respondents attributed their optimism to expected improved market, increase in productivity of their workforce and increase in the purchasing power of Ghanaians. About 26% of those interviewed think their performance will remain the same in the next quarter while nine percent expressed pessimism for the next quarter. They based their argument on what they see as adverse government policies, increase in utility prices and fall in purchasing power of customers, among others.

For the first time since the commencement of the AGI Business Barometer, cost of credit did not feature in the top three challenges facing businesses.

On the sector by sector basis, high cost of raw materials, high utility prices, and access to credit emerged the top three challenges restricting the growth of the manufacturing sector, while the agricultural sector cited access to credit, high cost of raw materials and lack of market as its top three challenges.

High level of taxation, high utility prices and cost of credit were ranked respectively as the leading challenges in the services sector, with access to credit, high cost of raw materials and low purchasing power as the leading challenges in the construction sector.

In terms of size access to credit, high cost or raw materials and high level of taxation lead the challenges of the Small and Medium Scales sector, with high utility prices, high cost of raw materials and competition from imported goods doing it for the large scale businesses.

Very large companies termed by the association as African Giants on their part have high utility prices, high level of taxation and depreciation of the cedi as their top three challenges.