KPMG survey confirms Ghana’s positive economic outlook Featured

By Kwasi Frimpong October 28, 2019 2206 457 comments

The renowned international audit firm KPMG, in its 2020 pre-budget survey report, has stated that Ghana’s macro-economic outlook, beyond 2018, remains positive.

This is, among other things, the result of the country’s investments into oil and gas, manufacturing and mining, which are expected to boost output and support broad-based economic expansion.

The report attributed the steady improvement in Ghana’s gross domestic product (GDP) to a combination of prudent fiscal policy, the commencement of crude oil production and the implementation of flagship policies, which have progressively restored confidence across key sectors.

The KPMG report buttresses the positive image of the economy, as painted by the International Monetary Fund (IMF) and the World Bank.

The World Bank report, released this month, said Ghana is among the fastest-growing economies in the world.

The report, which captured six of the world's 10 fastest growing economies in Africa, this year, listed Ghana, Ethiopia, Rwanda and Cote d’Ivoire as four of the best performing economies.


The KPMG research, conducted in August and September, this year, surveyed 35 business leaders from various sectors of the economy, for their perceptions of the business environment and the fiscal regimes that affect their business.

The sectors surveyed included construction, financial services, hospitality, manufacturing, mining, oil & gas, pharmaceuticals and agribusiness.

Others were retail, transport and logistics, technology, consulting, among others. Companies surveyed comprised multinationals, locals, and small to medium sized enterprises.

The report sought to provide an analysis of the perception of the business community, relative to the provisions of the 2019 budget statement, while serving as pointers for government in the preparation of the 2020 budget.

The survey looked at three key sections, including identifying the impact of recent fiscal measures to businesses, perception of the business environment and climate, and possible initiatives the government could introduce in the 2020 budget, to create a more conducive business environment.

The report identified some downside risks, which, according to the international audit firm, stems primarily from potential exchange rate weakness, which could eat into consumer purchasing power.

The report added that the economic output faces some risks, if government borrowing crowds out private borrowers, dampening the expansion in credit to the economy.

Impact on businesses

Despite the positive outlooks, the KPMG report said recent tax initiatives introduced by the government have had significant impact on businesses. The introduction of the three per cent VAT flat rate scheme, the report said, has been a disincentive, especially to wholesalers in the Fast Moving Consumer Goods (FMCG) sector.

The report described the three per cent VAT flat rate as counterproductive. “The result of this phenomenon could be that government will record high VAT revenues whilst depleting the working capital of businesses,” the report said.

Depreciation of the Cedi

The report also stated that the issue with sustained depreciation of the cedi remained a strong area of concern. The fall in the value of the cedi, according to the report, raised input costs and reduced margins.

“A combination of inflationary pressures, rising fuel prices and utilities are significant detractors to overall growth and profitability,” the report added.

KPMG, thus, suggested to government to regulate its expenditure pattern, especially as the country approaches elections next year, saying this will be the prudent thing for government to do.

“Government’s ability to control its expenditure, among others, will be key in stabilising the cedi,” the report said.

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