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CEO Delivers Keynote Address

The Chief Executive Officer of PEF, Nana Osei Bonsu delivers keynote address at USAID Miline Survey Dissertation Conference. Below is the full address:

 A KEYNOTE ADDRESS DELIVERED BY NANA OSEI-BONSU, C.E.O OF THE PRIVATE ENTERPRISE FEDERATION AT A DISSEMNATION CONFERENCE TO DISCUSS 2015 MIDLINE POPULATION SURVEY RESULTS AT ALISA HOTEL ON 17TH MARCH 2016

Mr. Chairman, the Mission Director, United States Agency for International Development (USAID), Representatives of Government and Public Agencies, Representatives of International Organizations and Other Diplomats, the Research Team, Invited Guests, Members of the Media,

Distinguished Ladies and Gentlemen, Good Morning.

Mr. Chairman, on behalf of the Private Enterprise Federation (PEF), I wish to express our sincere gratitude to the organizers of the conference for giving me the distinguished opportunity to deliver a keynote address at this important meeting. We believe this is in recognition of the important role that the private sector plays in the socio-economic development of the country.

Mr. Chairman, let me first commend the USAID for initiating the midline population survey as a follow up to the baseline population survey that was conducted in 2012. This is one of several activities undertaken by the USAID to support the development and growth of the Ghanaian economy over the years. It is worth noting that the Private Enterprise Federation itself was established in 1994 as a Foundation, with the support of USAID under their Trade and Investment Programme.

PEF as the apex business council today represents 80% of formal and informal businesses in Ghana and is made up of 14 leading business Associations and Chambers as against 4 at its establishment in 1994. The Federation’s core functions is to forge consensus and provide the leadership voice for advocacy on behalf of the private sector in Ghana and business development services to various enterprises. Like any constraints, after undertaking rigorous research to identify challenges and constraints to the way it was operating, PEF restructured not only to strengthen its own institutional capacities but also to add to its core functions, with capacity building for its members and other private sector players, business networking and market linkages to influence the competitiveness and profitability of the domestic private sector businesses. To bring innovations to the way the private sector conducts its business, PEF is building a web-based IT platform with support of the African Development Bank (AfDB) to provide the various portal; data and research portal, investment analytical portal, business development services portal and a portal to profile the domestic private sector businesses to link them to the international supply chain. This web-based platform will be operational latest by the third quarter of 2016. 

 
Mr. Chairman, the Ghanaian private sector employs about 93% of the working population both formal and informal but the high cost of doing business hampers the growth and success of this sector, hence, the need for the government to come out with policies that will make businesses thrive. The growth and profitability of private sector businesses will engender the growth of the middle income class. The high profitability margin generated by the private sector fuels the growth of a middle and high income group with the purchasing power to patronize goods and services. This scenario to create a high purchasing power within the economy that will fuel additional growth, with a propensity to create more wealth in the economy.

Mr. Chairman, the African Development Bank (AfDB) defines the African middle class as those spending between US$2 and US$20 a day i.e. in Ghana, it is between GH ¢8 and GH ¢80 a day. The upper middle class equates to those spending between GH ¢40 and GH ¢80 a day. The lower middle income spending between GH ¢8 and GH ¢16 are the most vulnerable in society. Forbes magazine defines the middle class as anyone with a job, income or business that allows them to be healthy and enjoy life’s basic needs. If that is the case, then it is imperative that in Ghana, we find ways to expand  and sustain the middle class to create a quantum of purchasing power that will  galvanize the growth of the economy. Otherwise, as attributable to AfDB by this research, “this nouveau middle class is vulnerable to minor economic shocks which could return them to the low income class”.

But Mr. Chairman, do we really have a middle income or we just glorifying ourselves by describing low poverty class as a middle income population?

The Private Enterprise Federation recognizes the significance of the Middle class as a key driving force for economic growth, job and wealth creation and poverty reduction. The opportunity is that large population middle class creates the very necessary quantum of purchasing power to patronize consumer goods and services. According to the Ghana Living Standards Survey 6 (GLSS6) the population between age 15-35 constitute about 34.1% of the Ghana population, with a majority of them living in urban areas (18.4%). The worrying situation is that for majority of the youth (33.9%) the highest school attainment for this group is the Basic Education Certificate Examination (BECE). They are locked into the wicked levels where their potential for high income jobs is impaired. As is most of today’s jobs are more challenging and require more skills than factory or other low-skill work. A booming services sector, contributing about 51% of GDP, calls for a need to place more emphasis on technological development and skills training to provide the workforce for the thriving industry. With a teeming youth, technological innovation to build their capacities with the relevant skills and entrepreneurial education should also be encouraged as an avenue for better jobs with high income levels and wealth creation.

 
Mr. Chairman, according to the 2014 Ghana Living Standards Survey (GLSS6), Agriculture currently employs about 44.3% of the working population (the largest employer in the economy) majority of whom are rural dwellers with little or no-education contributing  about 21% of the country’s GDP. This indicates that 44% of the working population are contributing 21% of the nations GDP. A crude productivity measurement means that productivity for this group is less than 50%. The government of Ghana has decided to use agriculture as the lead sector for the economic development of the nation. In line with the Comprehensive African Agricultural Development Programme (CAADP) signed by the 54 African nations including Ghana, the African Union Commission (AUC) through its technical arms of NEPAD and Forum for Agricultural Research in Africa (FARA) supported by numerous initiatives and programmes by AfDB, FAO, IFAD and the World Bank, Ghana and other African nations pledged to devote 10% of public sector spending in Agriculture investment, to cascade into 6% growth of the sector per year.  This therefore calls for innovative ways of improving the agriculture sector to create more high income jobs that will catalyze the creation of a larger middle income population. Should this happen, this new drive will pull the other sectors of the economy to follow the lead of agriculture and move a lot of the rural dwellers above the midline and expand the middle class.

In order to overcome these challenges, we at the Private Enterprise Federation believe that building the capacities of the private sector by strengthening or developing innovative skills, availability of relevant infrastructure accompanied by adequate resources for various entrepreneurial activities will enhance the opportunities and operations of the private sector to adapt and thrive in the fast changing world of competitive business.

Mr. Chairman, the Federation believes for sustainability of the country’s economic growth, both the public and the private sector should embark on a journey to provide the relevant resources to upgrade our skills and retool our productive capacities, to optimize the production of our goods and services at efficient pricing to compete in the global economy. Hence, the need for collaboration through policy dialogue is a very sure way of developing a strong coherent private sector to engage the Government in pursued of solutions to challenges and constraints to private sector businesses. High tax burdens, high cost of finance, unstable markets and citizenry agitations are major hurdles to a private-sector led economic development.

It is in the ultimate interest of our economy that this progress is built upon by providing the needed technical assistance and capacity together with financial opportunities to ensure sustainability, which will help the country provide for its citizens without the incessant dependency on aid from international aid agencies.

Mr. Chairman, Distinguished Ladies and Gentlemen, this presentation is my humble attempt to tease participants into an interactive discussions on the various policy options for economic development; ie do we pursue the continuous dependency on public sector driven, tax and spend policies with accompanying borrowings, depreciating currency and higher inflation, that lead to dilution of our purchasing power: OR do we adopt an option of private sector driven, business led operations, that provide profit margins not only to the risk taking-entrepreneur, but also creates jobs and incomes to the citizens and most importantly critical tax revenues to government to enable it to execute its agenda.

Mr. Chairman, it is my believe that a thorough and holistic discussion of the midline survey and the points raised here this morning, will be our contribution to re-direct our economy on the path of accelerated sustainable economic growth.

I thank you for listening

 

NANA OSEI-BONSU

CEO, PRIVATE ENTERPRISE FEDERATION

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