IMANI Ghana, a policy think tank, has backed calls for the privatisation of the Electricity Company of Ghana (ECG) to inject capital and innovations in electricity distribution in the country. It said the privatisation of ECG was the only way government could address the challenges facing the energy sector.
The Head of Business of IMANI Ghana, Aboagye Mintah, who disclosed this during the launch of IMANI Business Environment Report in Accra yesterday, explained that privatisation of ECG had become necessary to address the inefficiencies of the company.
The report, spanning 2011-2016, covers issues such as access and cost of credit to the private sector, exchange rate volatility, inflation rate, cost and availability of power supply and tax rates and administration.
It drew largely on reports such as the World Bank Ease of Doing Business Report, the Association of Ghana Industries Business Barometer Report and World Economic Forum Global Competitive Index, which identified the issues aforementioned as some of the challenges facing businesses in Ghana.
Mr. Aboagye said the percentage of distribution losses out of ECG’s total purchases averaged about 25 per cent from 2011 to 2014.
“ECG’s distribution inefficiencies need to be reduced. One way to do this is to privatise ECG,” Aboagye Mintah said, adding that “otherwise, it is recommended that government helps ECG to obtain appropriate facilities to reduce commercial and technical losses during electricity distribution.”
On access and cost of credit to the private sector, he lauded government for the establishment of the Export Trade, Agricultural and Industrial Development Fund (EDAIF), which had been transformed to the Ghana Import-Export Bank.
He said, the fund had contributed to the increase in the growth of real credit to the private sector from 16.3 in September 2011 to 31.4 in September 2012.
“IMANI recommends the preparation and implementation of a holistic and comprehensive private sector strategy to ensure that the private sector has access to affordable credit. A large portion of proposed funds for such a strategy should not be strongly tied to loans in case government fails to secure the loans,” Mr Mintah said.
On power supply, Mr. Mintah asked government to settle its indebtedness to all the players in the energy sector to address credit challenges facing players in the sector.
He urged government to reduce the reliance on hydro energy and focus on renewal energy.
Touching on inflation, he said, there was policy incoherence between the fiscal policy of the Bank of Ghana and the monetary policy of government and that was accounting for the rising of the rate of inflation.
Mr. Mintah urged for the passage of a biting Fiscal Responsibility Act, adding that the Act, should be backed by a Fiscal Responsibility Council whose head should be appointed by Parliament on non-partisan basis.
The founder and president of IMANI Ghana, Franklin Cudjoe said the objective of the study was to create a forum to enhance the relationship between government and the private sector.
He said policy incoherence was a bane of the country’s development and the study looked at key policies and laws to appreciate gaps related to identify constraints.