The fund, to be managed by the Private Sector Development (PSD) Board is one of the new strategies to combat the slow growth of Ghana’s private sector.
The strategy, which is the second phase of an earlier one is called Private Sector Development Strategy (PSDS) II and comes amid challenging times for Ghana’s private sector.
The first strategy PSDS I was launched in 2005 and lasted till December 2009. In spite of its ambitious goals, the PSDS I achieved mixed results. For example Ghana’s rating in the World Bank’s Doing Business Report which ranks 183 countries on issues of doing business saw improvements and declines over the period. In 2006/2007 Ghana was named among the top ten reformers in the Doing Business Report – ranked 82. However in 2008 and 2009, the country’s position declined to 92.
Another index that measures Ghana’s private sector’s development is the Global Competitiveness Index (GCI) produced by the World Economic Forum. The GCI 2008 to 2009 ranked Ghana 102 out of 134 countries and described Ghana as a factor-driven country; which implies that firm level productivity is low and innovation is non-existent.
The PSDS II like its predecessor is aiming to involve all stakeholders to act and collaborate to make Ghana an attractive investment destination for local and international investors.
Apart from a not so strong economy that will support the private sector, several other factors come into play when the private sector development is concerned: lack of access to credit, regulatory challenges and so on.
Furthermore investments in Ghana have been skewed to a few sectors namely: mining, oil, finance and telecommunications while at the same time such investments have ignored the rural economy.
In a published advert, Ishmael Yamson and Associates the consultants who prepared the strategy stated that the “PSDS II will enable us to do three things to overcome these challenges… to make Ghana an attractive place for local and international entrepreneurs to start up and expand businesses…to encourage investors to put money in areas other than mining, oil, telecommunications and finance.. to give incentives to businesses to create more secure, well paying jobs.”
One of the setbacks of the PSDS I was that it had no clear organizational structure for its implementation. However the PSDS II is mitigating that by setting up a PSD Council which will be chaired by the President. The membership of the Council will be made up of leaders and champions of the private sector, government of Ghana representatives and development partners. It is believed that with the President at the head of the PSD it will get high level attention.
The PSD Council will appoint the PSD Board which will establish and manage the estimated GH¢1 billion Private Sector Development Fund. The fund will receive money from the government of Ghana and attract funding from Development Partners.
Furthermore, it is also expected that at the end of the PSDS II in 2015, the private sector would have created 500,000 new jobs and rural incomes in the three northern and central regions would increase by 20%.
Source: ghanabusinessnews.com
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