Business confidence in Ghana remained resilient in the second quarter of 2026, even as firms grappled with escalating electricity tariffs, limited access to credit, and intensifying competition from cheap imports, according to the latest Business Barometer released by the Association of Ghana Industries (AGI).
The barometer, which surveyed businesses across manufacturing, services, and construction, recorded a Business Confidence Index of 108.7 for Q2 2026, marginally down from 109.5 in the first quarter. The AGI noted that any reading above 100 signals continued optimism among the private sector, buoyed by improving macroeconomic stability and growing faith in the government’s economic reform agenda.
“The slight dip does not indicate a loss of faith. Rather, it reflects the cautious realism of businesses that are seeing recovery but are still battling structural cost hurdles,” said Mr. Seth Twum-Akwaboah, Chief Executive Officer of the AGI, in an interview with the Daily Graphic.
The survey revealed that 42 per cent of firms reported improved performance during the quarter, while 47 per cent said their performance remained unchanged. Only 11 per cent recorded deterioration. Looking ahead, optimism was even more pronounced: 72 per cent of respondents expected better performance in the coming months, 26 per cent anticipated no change, and a mere 2 per cent foresaw a decline.
Electricity Costs Top List of Headaches
Despite the upbeat sentiment, the survey identified the high cost of electricity as the single most pressing challenge, cited by 19 per cent of respondents. This concern cut across all sectors – manufacturing, services, and construction – and was equally pronounced among small, medium, and large enterprises.
“We have had three tariff increases in the past 18 months, and each one squeezes our margins. For a textile factory like ours, power is nearly 30 per cent of our operational cost,” lamented Mr. Kwesi Amoako, a garment manufacturer in Tema who participated in the survey.
The AGI noted that electricity-related cost pressures persisted throughout the quarter, with no immediate relief in sight. The regulator, the Public Utilities Regulatory Commission (PURC), has not announced any tariff review for the second half of the year, leaving businesses bracing for sustained high energy bills.
Other major concerns included the high cost of raw materials (14 per cent), the multiplicity of taxes (12 per cent), limited access to credit (11 per cent), and deplorable road networks (9 per cent). The multiplicity of taxes, in particular, has been a recurring grievance, with businesses calling for a rationalisation of levies such as the National Health Insurance Levy, the COVID-19 Levy, and the VAT on financial services.
Credit Access: More Lending, Less Impact
The AGI also sounded a note of caution regarding private-sector lending. While the Bank of Ghana’s data shows a year-on-year increase in credit to the private sector, the association argued that this expansion has yet to translate into tangible benefits for the real economy.
“Banks are lending, but the terms remain prohibitive – interest rates are still above 25 per cent, and collateral requirements are onerous. Many SMEs cannot access these funds, and even those that do are using them for working capital rather than expansion,” Mr. Twum-Akwaboah explained.
The concern was most acute among construction firms, where access to credit ranked among the top three obstacles. The construction sector, which is heavily reliant on upfront financing for materials and labour, has seen a slowdown in new projects, with developers citing high borrowing costs as a key deterrent.
Imports Threaten Local Manufacturing
Perhaps the most alarming finding in the report is the growing influx of imported goods and its corrosive effect on domestic industry. The AGI warned that local producers are losing market share due to what it termed an “unbridled influx of imports” and unfair trade practices.
The association identified smuggling, tax evasion, and import misdescription as major contributors. In particular, it alleged that some imported goods are being deliberately misclassified as raw materials to attract a concessionary duty rate of 5 per cent, instead of the applicable 20 per cent for finished products. Others, it said, enter through unapproved routes to avoid duties entirely.
“This is not competition; it is predation. Our factories are competing against goods that have not paid their fair share of taxes, and that is simply unsustainable,” Mr. Twum-Akwaboah asserted.
The impact is starkly illustrated in the wheat flour industry. According to the report, Ghana’s installed flour production capacity stands at about 800,000 metric tonnes per year, yet current output is only 320,000 metric tonnes – a capacity utilisation rate of just 40 per cent. This marks a sharp decline from 57 per cent in 2021.
The situation is similarly grim in other sectors. The washing powder industry is operating at only 30 per cent of installed capacity, while vegetable cooking oil production is running at about 76 per cent. The cumulative effect, the AGI warned, is a loss of jobs, a shrinking tax base, and a widening trade deficit.
Inflation Reverses Disinflation Trend
The barometer also flagged a reversal in the disinflation trajectory during the quarter. Average inflation rose from 3.4 per cent in Q1 to 4.1 per cent in Q2, driven largely by external factors. The AGI pointed to the ongoing conflict in the Middle East, which has disrupted global supply chains and pushed up the prices of crude oil and shipping freight, as a key contributor.
“We had hoped to see inflation dip below 3 per cent by mid-year, but geopolitical shocks have thrown a spanner in the works. The central bank’s policy rate remains at 18 per cent, and we expect that to stay until the external environment stabilises,” noted Dr. John K. Agyekum, an economist at the University of Ghana who reviewed the findings.
Outlook: Positive but Cautious
Despite these headwinds, the AGI said the outlook for the second half of 2026 remains broadly positive. The association expects continued macroeconomic stability – anchored by a stable exchange rate, improved fiscal discipline, and rising gold and cocoa export revenues – to provide further impetus for growth.
However, it cautioned that high energy costs, persistent financing gaps, and unfair import competition remain significant risks. The AGI urged the government to accelerate the implementation of the new Cocoa Board Bill, review the tariff structure for industrial power, and intensify border surveillance to curb smuggling.
“We are not asking for handouts. We are asking for a level playing field,” Mr. Twum-Akwaboah stressed.
The Q2 2026 Business Barometer was based on responses from businesses across the country. Manufacturing and services each accounted for 47 per cent of the sample, while construction made up the remaining 6 per cent. Small and medium-sized enterprises constituted about 90 per cent of respondents, with large firms and African Giants representing the remaining 10 per cent.
As Ghana navigates a fragile economic recovery, the AGI’s report serves as both a barometer of resilience and a call for urgent policy action to secure the future of domestic industry.
