Ghanaian businesses severely impacted by recent floods will compel their workers to stay home for an extended period. Mark Badu Aboagye, CEO of the Ghana National Chamber of Commerce and Industry (GNCCI), confirmed this development. Many member organisations are facing significant operational challenges.
These businesses are not terminating employment but cannot resume normal operations due to flood damage. Manufacturing companies, in particular, reported destroyed raw materials and damaged stock. The process of restoring their facilities will take considerable time.
This situation adds to Ghana's broader economic challenges, including rising inflation and a high cost of borrowing for businesses. The Bank of Ghana recently held its policy rate, yet borrowing costs are projected to increase. The disruption from the floods could further strain business liquidity and overall economic recovery efforts.
Mark Badu Aboagye stated, "we are not sacking them, but rather they have to stay home as long as we have not been able to put our offices back in shape." He noted that while many enterprises have insurance, processing claims for restoration can be a slow process. Ernest Frimpong, Managing Director of Bedrock Insurance, responded that insurance firms aim to pay claims within five days. However, delays occur because businesses often fail to submit necessary documentation quickly.
The current situation suggests a potential increase in unemployment or underemployment in affected areas. Businesses will face cash flow issues while awaiting insurance payouts and rebuilding their operations. Financial institutions anticipate a rise in non-performing loans, prompting discussions with affected clients.
John Awuah, CEO of the Ghana Bankers Association, affirmed banks' commitment to renegotiate credit facilities for impacted businesses. He stated that commercial banks offered similar support during the COVID-19 pandemic. Awuah acknowledged the floods will negatively impact banks' loan books, but they expect to manage the situation.
This widespread disruption from the floods underscores a critical need for improved urban planning and disaster preparedness. Experts on a panel expressed frustration, calling the floods 'manmade' and avoidable. The long-term implications for the affected businesses and their employees remain a key concern. Policymakers will likely need to explore direct support mechanisms for small and medium-sized enterprises (SMEs) hardest hit by the disaster.