Dr. Ackah, an economist who is also a Senior Research Fellow at the Institute of Statistical, Social and Economic Research (ISSER) says the high cost of power in Ghana has augmented the cost of doing business which has made it difficult for industries to expand and pay back loans taken from banks.
He passed this comments when he spoke to Citi Business News at the launch of a new research on the effect of the power crisis on Small and Medium Enterprises.
‘Seeing that two banks have already folded up and eight others still struggling to cope means that if we do not do something about our energy, firms are going to be uncompetitive, they’re not going to be able to pay off the loans that they take from banks and we are going to have more collapse of banks and the systematic and multiplier effect will be very huge,” he emphasized.
His assertion comes weeks after the collapse of two banks; UT and Capital Banks due to their high liquidation.
The huge energy sector debt has poorly affected the balance sheets of commercial banks in the country; businesses are also burdened with the high cost of power which has affected their cost of operations and their capability to repay loans.
The cost of power in Ghana is quite expensive compared to others within the sub-region.
According to him, government must embark on a practical effort to reduce the cost of power to keep businesses buoyant.
“We are paying more for energy than what China or India is paying so it means the cost of doing business in Ghana is expensive and if you add unto the interest rates that these firms would have to borrow. Already our analysis has shown that the collapse of some banks can be linked to the dumsor because the banks are suffering from Non-Performing Loans.”
“These firms who have folded up and are struggling, had borrowed from the banks to be able to do business and because of the power crisis, many of them were unable to pay hence collapsed.”
Source: citifmonline.com
