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A whopping 66 percent of CEOs are optimistic of better business performance this third quarter, though most indicated their businesses did not improve in the second quarter. The Association of Ghana Industries (AGI) Business Barometer survey report for the second quarter shows that over 43 percent of industrialists perceived their businesses as not having fared any better, while just above 31 percent registered a better performance. Dr. George Dawson Amoah - MD of GHACEM - opined that the current high level of optimism is bolstered by expectations of increasing government spending as election year draws closer. �We expect government to channel more resources into payment of contractors while new construction projects will boost economic activities generally,� he said. The president of the AGI, Nana Owusu-Afari, pointed out that continuing implementation of the single spine salary structure will translate into more disposable income and higher purchasing power leading to higher consumption, thereby enhancing business activities. Other reasons accounting for the heightened confidence include improved human resources as more businesses commit to training their staff, as well as a generally improved market situation. However, the approximately 34 percent of pessimistic industrialists who either felt their businesses would remain the same or be worse-off, indicated their businesses are still buffeted by high levels of taxation, new government policy - including the 20 percent environmental tax - and high utility prices. The AGI Business Barometer Indicator, which measures the level of confidence in the business environment and predicts short-term trends, crawled up to 30.3 in the second quarter from the 30.0 recorded in the first quarter of 2011. Nana Owusu-Afari said the predominantly flat nature of the AGI BBI over the eight quarter since its inception is indicative of stagnant growth in industry, and said this could imply government policy failure to address challenges facing industry. The 300 respondents in the AGI BBI Q2, 2011 survey indicated that the top-two critical factors hindering growth of businesses in the country are a lack of access to credit and the high cost of credit. Industrialists say this gives ample evidence that financial intermediation in the country is still poor, despite the proliferation of commercial banks in the country over the past decade which now number 27. The CEOs said the challenges with credit imply that industry is unable to harness new technologies for improved productivity through retooling, thus rendering local companies less competitive. The Global Competitiveness Report 2010-2011 described Ghana as relatively well-developed: however, business operators in the country do not share this view as they claim it is still difficult getting loans and those who get credit bemoan the high lending rates. Business operators are increasingly calling on the Bank of Ghana to strengthen its regulatory role to remove the inefficiencies in the financial system to improve access to credit and bring lending rates within competitive levels. High cost of raw materials, which shot into prominence as a critical challenge to industry in the first quarter, dropped to fifth position in the second quarter. AGI Executive Director, Mr. Seth Twum-Akwaboah, attributed the drop to the relative stability of foreign exchange in recent months. �A significant number of manufacturers use imported raw materials in their production processes and are highly affected by the foreign exchange situation. The stability enjoyed in recent times is having a positive effect on business operations. This is in conformity with the drop in the producer price index (PPI) released by the Ghana Statistical Service for last month,� Twum-Akwaboah said. Viewed by sectors, the manufacturing sector indicated that high utility prices, access to credit, and high level of taxation are the top three challenges that confront the sector. Agriculture recorded access to credit, high cost of raw materials, and cost of credit - in that order - as the top-three factors limiting the growth of the sector; meanwhile, the services sector identified high level of taxation, cost of credit, and access to credit as its key challenges. The construction sector ranked access to credit, delayed payments, and cost of credit first, second and third, respectively, as the main obstacles to its growth.