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Discord over Ebola readiness dangerous

Wednesday, 30 July 2014 12:02

While countries in the West African sub-region are working hard to halt the deadly Ebola virus from entering their countries, Ghana seems to be in a state of confusion.

Comments from the very institutions responsible for fighting the disease call for worry.

Director of Public Affairs at the Ghana Immigration Service, Francis Palmdeti has said only four of Ghana’s 42 legitimate entry points are equipped to handle the deadly disease.

According to him, only Aflao, Elubo, Paga, and KIA are secured to some extent to screen travellers.

In addition, there are lots of other unapproved routes into the country.

 The Ghana Medical Association (GMA) also buttressed the position of the Immigration Service.

 The Deputy General Secretary of the GMA, Dr Justice Yankson, said their major concern has to do with the preparedness of the facilities themselves.

He said the hospitals and clinics across the regions and districts are not clearly prepared for any "possible outbreak," adding that "looking at the way the virus is spreading across Africa, the country must be able to make adequate preparation so that if in an event there is an outbreak the country will be able to fight it."

 Instructively, the Ministry of Health has cast doubt over claims by the Ghana Immigration Service that only four out of the country’s 42 legitimate entry points are equipped to handle the Ebola disease.

Public Relations Officer of the Ministry of Health, Tony Goodman was sceptical about the statistics put out by the Ghana Immigration Service.

He said, “We’ve done a lot. We’ve gone out there to see some of those guys there to work so if Immigration is telling us that we have four, I am not sure about that.”

Tony Goodman stressed that the ministry has done a lot concerning Ghana's preparedness to deal with the disease.

It is disturbing to hear the Health Ministry on one hand say the country is prepared while the GMA, which constitutes the professional bodies, states the opposite.

The Finder is appealing to President John Dramani Mahama to quickly summon the Health Minister, Immigration boss and GMA leadership to draw up a comprehensive strategy to fight off Ebola.

Resources required to treat patients would be more expensive than resources needed to roll out strategies to prevent the disease.

Aside resources, the country also risks losing human capital needed to fight this dreadful disease.

An Ebola outbreak in Ghana will have dire financial consequences for an already struggling economy.

It has the potential to scare away potential first-time investors who may be planning to come to Ghana, as well negatively affect tourism as visitors may stay away.

We need to act now to prevent a clear and present danger.








Why Rlg may deserve a tax rebate/concession

Tuesday, 05 August 2014 13:17

By Steve Kofi Tweneboah

Street naming is a must

Tuesday, 23 September 2014 13:22

There has been rekindling interest in the naming of streets in recent times.

In the advanced countries where cities have practically outgrown their sizes, street names are ubiquitous and, obviously, very helpful in so many ways.

To name a street without storing that information in a computer system in a way that can help achieve easy location of places by Fire and Police Services, Geographical Analysis, home and location addresses, as well as Business and Tax Applications is to simply throw away the taxpayers’ money without a cause.

To store information pertaining to streets without planting a street name sign does not make sense either.

Together with other geographical data, it is possible to integrate such data with geographical information system (GIS) to harness its enormous capabilities.

 Such a system can be customised or tailored for many institutions and organisations that need geographical decision support to work effectively.
The recent spate of crime across the country has raised several questions about whether the police are really in control.

 The deficiency or absence of street names and a corresponding storage and query system means that when a person is attacked by an armed robber, his/her location cannot be accurately communicated to the police.

 The police should be able to check within the shortest possible time where exactly the victim is for quick response.

If street naming had been intensely pursued, the information provided by the potential victim could be fed into the system, which could then immediately show on a computer screen, upon query, a representation of the geography of the area where the victim resides, including their very own precise location.

This representation of geographical reality, also known as a map (a digital map in this case), can guide the police in the appropriate beat or response team to have little or no excuse not to be able to help the victim out.

The scenario being given here applies equally to the fire services.

Information collected from people about their geographical locations can help in analyzing the spatio-temporal patterns of the incidences of disease, crime, and other phenomenon.

Talking of disease, epidemiological databases can be created to contain addresses which patients can only supply if they can see a street name sign on the nearest junction on the street they live on.

Once a street can be represented on a computer graphically, it is also possible to find house numbers on those streets almost automatically.

The fastest and most convenient way to collect tax revenues from citizens is through the use of maps.

If tax collectors can collect tax effectively, they need to be accurate in doing that; they need a map with street names that exist on the ground too.

This way, their staff can find anyone who has told the truth regarding his dwelling or business address.
In a country like the United States of America (USA), a reliable address system makes it possible for the postal service to deliver parcels to homes.

For Ghana to develop, street naming is a must.



IMANI Alert: What Ghana’s current ranking on the Global Competitiveness Index means for its development.

Wednesday, 24 September 2014 12:37

 The World Economic Forum (WEF henceforth) has recently published the 2014-15 edition of its Global Competitive Index (GCI), which is a well-trusted spatial comparison of economic competitiveness.  The credibility of the GCI stems from its comprehensive nature in the use of over a hundred indicators to produce complete annual analyses of the competitiveness of over a hundred economies around the world. Since its debut in 1979, the GCI has caused many - and rather important - dialogues among policymakers, business leaders and other members of civil society, which makes it an import index for stakeholders of the Ghanaian economy.  It is important to note that this comprehensive tool measures the macroeconomic as well as the microeconomic foundations of national competitiveness. 

Ghana has been ranked 111th out of the 144 economies analysed in the Index. Additionally, Ghana attained a score of 3.71 on a scoring scale of 7 maximum. This year’s ranking of 111 comes as an improvement in the competitiveness of the Ghanaian economy as the Ghanaian economy was ranked 114th in the 2013 report; in other words, the economy has moved forward three places. Whereas this may appear an improvement - albeit only little - eyeballing the GCI trend over time, one finds that the Ghanaian economy has still not been able to recover to the ranking of 103rd it held in the 2012 rankings. The basic requirements for competing globally saw Ghana ranked 123 out of the 144 countries, which is a progression of 5 places higher than last year’s ranking. The upward movement of Ghana’s competitiveness is nonetheless shaky, especially when looking at the sustainability of the modest gains in competitiveness.

The late twentieth century saw a shift in focus from mere economic development to sustainable development - which was defined by 1987 publication of the 'Our Common Future' Report as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” 

In this sustainability milieu, Ghana’s performance is not the most promising. Social sustainability (which encompasses vulnerability to economic exclusion and the fulfilment of basic physical needs) reduced and environmental sustainability did not change in comparison to the 2013 rankings. Once the GCI has been adjusted to take into account sustainability, Ghana’s score of 3.71 reduces to a worrying 3.6. 

What may come as a surprise to many is that the Index reports that Ghana’s competitive advantage lies in its institutions - with Ghana being ranked 50th or above under the sub categories of intellectual property protection , independence of the judiciary from government influences, efficiency of government spending of public revenue and strength of investor protection. It is oft-cited in Ghana - and in other developing countries too - that the private sectors perform better than the public sector and this sentiment is largely reflected in the WEF report. Ghana is ranked 50th or above for the following private competitiveness indicators: Spread of corporate activity amongst firms, Effect of taxation on incentives to invest, Taxing of profits, Business sophistication and Market size. This positive performance in the microeconomic competitiveness is in stark contrast with the poor macroeconomic environment. On the measures of Government Budget Balance and Inflation, out of 144 economies, Ghana was ranked 141st and 140th respectively.

 Admittedly, there has been a negligible improvement in the overall macroeconomic environment; however, there is no room for complacency here, especially with regard to the budget balance as it is an important indicator of how government activity impacts the rest of the economy financially in many ways

The stability of a country's macroeconomic environment and its institutions are inextricably linked and as such the two pillars should ideally complement each other for long-term development of the Ghanaian economy. Contentiously, the atrocious macroeconomic environment in Ghana could render the gains in institutional quality redundant and kick start a vicious cycle of poor institutions leading to worse macroeconomic environment and consequently vice versa. 

The cedi has been on a downward spiral, notably since 2012, with a 14.6 per cent annual depreciation against the US dollar in 2013 and 17 per cent in 2014. At face value, the cedi depreciation may be blamed on current account imbalances but on closer inspection; there are more grave issues. Conventional economic wisdom will suggest that some depreciation of a currency should rebalance the current account in the long term. However, this has not been the case for Ghana; the current account deficit increased to 13.7% of GDP in 2013, according to Fitch Ratings.  There are several issues surrounding why the depreciation has not been positive for Ghana's current account. Foremost, the situation is characterised by the twin deficits hypothesis; which in non-economic language means that running a fiscal deficit is concomitant with a current account deficit. Also, Ghana relies on several primary commodities which are notoriously susceptible to volatilities; therefore the cedi's depreciation does not necessarily allow for a correction of current account imbalance. Overreliance on overpriced imported goods is also another factor accelerating the depreciation of the cedi, increasing inflation and consequently the instability in the economy.  Additionally, the short-term attempts by the Bank of Ghana to slow down the depreciating cedi has been an ignominious mess, showcasing the dilemma between saving the cedi or forgoing foreign investment. Foreign exchange controls and directives banning the issue of cheques on foreign currency accounts have not been widely welcomed by businesspeople and foreign investment, which late translated to the Bank loosening the initial controls announced in February 2014. The interplay of inflation and a weakening currency has become a chicken-and-egg problem. But regardless of which came first, the problem is certainly one that needs to be prioritised, in order to stabilise the macroeconomic environment in Ghana. 

Moreover, as Ghana is sometimes seen as a model for the ‘Africa Rising’ picture, one would expect her macroeconomic performance to be at par with the Sub-Saharan Africa region average; yet, this is worryingly not the case.

We do not need to dig deep into economic history to identify the problems that fiscal deficits pose for economies. The US and European budget deficits in the aftermath of the financial crisis highlighted that fiscal deficits are detrimental to the private sector of an economy too. Inflation, when it soars as high as that of Ghana’s 15.3% (correct at the time of writing), also puts a downward pressure on businesses; put simply, firms are unable to operate efficiently when inflation rates are out of hand. In the case of Ghana, this could further escalate to a reversal of the positive investment patterns in early 2000s, where local and international investor confidence was heightened owing to Ghana’s relative economic stability in the African region.  

 Ipso facto, our economy, despite moving three places up the GCI, cannot be expected to grow in a sustainable manner unless the macro environment is stable. It is true that Ghana is one of the most advanced countries in the region, taking a look at social sustainability, there are gaps in indicators such as access to improved sanitation, social safety net protection and youth unemployment . It is rather unfortunate that the aforementioned sanitation - or lack thereof - has manifested itself mercilessly through the current cholera outbreak, of which thousands have been affected and 300 had died in the Greater Accra Region alone. In terms of environmental sustainability, deforestation is still a problem for the economy, and on average, almost 5 per cent of the forest cover is lost each year.  Moreover, the increased attraction to independent small-scale mining - or ‘galamsey’ as it is known in Ghanaian diction - has had negative impacts on previously arable lands. In addition, environmental regulations are not very stringent and tend to be somewhat poorly enforced.  

Going forward, the main challenge will therefore be to turn the modest gains; trickling down to a larger proportion of the population.  Much remains to be done to lay the foundations for sustainable long-term growth, requiring efforts across all areas - social and environmental alike. The foreword of the WEF Report urges government and business leaders to work together in order to balance out the struggling economies. Finally, development requires cohesive improvement in institutions, infrastructure, macroeconomic institutions and health & primary education.  

 Ms Janiece King is the primary contact for this article. Ms King is an IMANI intern and student of the London School of Economics.  








Job creation needs urgent attention

Monday, 29 September 2014 13:27

The unemployment problem in Ghana has reached an alarming level. As at 2011, it was estimated that almost four million people out of the 14 million people within the age group of 15-64, regarded as active or working population, are without employment, i.e. those who do not receive any kind of earnings, whether as wage payment or as compensation in self-employment.

This is equivalent to about 28% of the total active population (15-64) of Ghana. The proportion of Ghanaians without employment even increases to 47.2% if we consider only paid employment. This translates into about 6.7 million of active Ghanaians who are not in any paid employment.

The situation seems to be more precarious for the youth aged between 18 and 35 years. This age group indeed makes up only about 26% of the entire population of the country, but they account for over 45% of the total unemployed Ghanaians.

Statistics indicate that whilst about 250,000 young people enter the labour market annually, less than 5,000, representing 2%, are able to find employment in the formal sector, leaving about 98% unemployed or to survive in the informal sector on unsecured income.

Formal sector employment accounts for only about 14.5% of the total population of close to 25 million people.

A frightening dimension of the unemployment problem is the rising levels of graduate unemployment, which is estimated to have currently reached over 44% of graduate school leavers. 

The importance of employment to human sustenance and a country’s development cannot be overemphasised. To a nation, employment is not only a catalyst to growth but also a means to poverty reduction.

To the individual, employment does not only improve the quality of life but also provides opportunities for self-fulfilment.

In Ghana, the importance of employment is underscored by the recognition of the right to work not only as a basic human right, but also a constitutional right.

This right to work, however, is gradually becoming very difficult for both government and individuals to realise due to the rising levels of joblessness.

Addressing the unemployment challenge, however, requires coherent and co-ordinated growth and employment strategies and the necessary political commitment to implement and monitor employment targets agreed upon in the national development policy framework.

It is the position of The Finder that governments must develop active employment policies through the promotion of long-term employment strategies and measures to raise productivity, competitiveness and encourage the development of industries and enterprises that can provide large number of jobs.

Government must also deepen State-owned Enterprises (SOE) reform to create space for sustainable employment.

Also, government has to strengthen human resource development, as well as enhance business start-up capacity and employability of the labour force.

The Finder is of the view that employment in the private sector may be the ultimate solution, but in the present situation, the private sector is too weak to be expected to provide employment in their right quantity and quality.



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Need to improve English among students

Tuesday, 07 October 2014 12:20

The standard of written and spoken English among the youth in the country has been a source of concern.

The situation is more worrying among students at all levels of the educational system.

Teachers have come under severe criticism from members of the public for this worrying situation.

It is true that the kind of English some teachers speak is a true reflection of the poor standard of spoken and written English in the country.

This can be blamed on weak supervision by the Ghana Education Service (GES).

The GES has to organise refresher courses in English grammar for teachers and ask the teachers to modify their teaching techniques.

Currently, many schools across the country, especially basic schools, do not have libraries while the few ones with libraries do not have the requisite books.

Years back, basic schools could boast of elementary English books that contained stories such as Market Day at Asesewa, Obiba J.K., Anokye Goes to England, Alidu and His Goat, and Dede and Mensah, which went a long way to improve spoken and written English.

Today, such books written in simple English are missing from the school system.

In the past, most homes had libraries where essential books were kept and parents ensured that their wards read at home.

Parents and guardians have a major role to play in raising the standard of written and spoken English among students.

It is a fact that English language cannot only be learnt within the periods allocated on the time table in the classroom, hence the need for all to support in that direction.

The traditional Ghanaian practice is that some parents go out and return home with candies, pastries and bread for children.

Parents can change that by bringing home simple supplementary readers so that the children can read them along with the textbooks.

This would go a long way to help students to comprehend the language, enrich their vocabulary and style of writing.

The acquisition and use of the English language is pivotal for a meaningful headway in any academic or intellectual pursuit.
The fallen educational standard in the country is as a result of the downward trend in the use of the English language.

Therefore, the proposal to use local languages as the medium of instruction at the early stages is not the solution because we, as a people, have adopted English as our national language.

Enforcing the use of local languages as the medium of instruction in schools in the formative years could worsen the current bad state of written and spoken English since all examinations are written in English.

The speaking of Pidgin English, which has become a fashion in society, must also be discouraged.

The government must take the bull by the horn and provide all schools with functioning libraries as well as tighten supervision; parents should also take keen interest in promoting reading among their children.

Blaming bad written English on social media is, to say the least, the laziest solution to the problem.










This is not an Arrogant Man!

Monday, 13 October 2014 13:27

It is unfortunate that sometimes we allow perceptions to grow to become facts. This is what has dominated Ekwow Spio-Garbrah’s life ever since he entered the political arena.

Sadly, for a communications specialist, he has done nothing to clear these erroneous perceptions about him.

Consequently, the tag has followed him, and I believe that it may soon become a problem for him as he starts his new job as minister of trade.

I want to believe that he is rather intimidating because of his height and size. In addition, he is an achiever so he carries himself as a very confident man that most people misconstrue as arrogance.

It is for this reason that when his nomination was announced l started watching out to see his response. If he had turned down the offer, l would have seen the real arrogance in him for the simple reason that he was once upon a time President Mahama’s boss as the minister of communication.  

There are some people who would have seen the offer of a job as demeaning, especially in this part of the world. In some other countries, Prime Ministers have come to work as ministers under some other ministers who served under them.

It is yet to happen in Ghana, and perhaps Africa. I cannot imagine any of our former Presidents agreeing to become a minister of some sort even if our Constitution allowed it.

Spio-Garbrah impressed me when he graciously accepted the offer to serve under President Mahama. He proved to me to be a rather humble person.

 This, for me, marked him out as a man ready to serve his motherland in whatever capacity. He might have said certain things in the past that have been misconstrued, but as human beings, we all say things that may come to haunt us one day. There is something in this whole thing that we all need to learn from. Time changes!

At the time that Spio-Garbrah was a minister and President Mahama his deputy, there was no way that he could have imagined that he would one day be at the mercy of President Mahama. That is to say, the tables turning, for him to be nominated by his deputy at a future date to serve in his Cabinet, and perhaps even sleeping and waking up hoping that the man who has appointed him would not dismiss him. Life has its own way of determining our fates.

I hope that others have picked a point or two. We have some people in this country who behave like there is never a tomorrow that could change things for them. It is possible that the messenger or the driver you employ today could climb up ahead of you.

It has happened in other people’s life and so it is possible. There may be those who think that what they have achieved today is so much that there is no way their fortunes would change - God can change things!

Sometimes, these changes do not bring you down the ladder, but some level of change occurs and comes to confirm that we are really humans in the hands of God or clay in the hands of the master craftsman.

Millionaires have fallen; men of God have fallen; and ordinary people have fallen at one point or another. In some cases, employees of millionaires have had the opportunity to be those who brought something new to their former bosses. It is only those who are arrogant that refuse to see these changes when they occur in their lives.

I have had a few contacts with Spio-Garbrah, and in all these, it was only his ‘pushy’ nature that l remember, and not arrogance.

The first-ever contact was in the World Bank offices in Accra when he came to Ghana with the IFC President some years ago. He did not look down on us the reporters who were present, and I remember Ben Ephson was one of us.

My next contact was in the offices of Africa Economic Digest (AED) when he had come to discuss an Africa Development Bank meeting with the then editor, Eddie Momoh. Again, the man did not show any arrogance.

When l met him in his office when he was minister of communication to discuss a country report for Time magazine, he was the cool-headed person that l saw, and the last time we had some contact was over phone when upon someone’s recommendation he offered me a job which l could not take up. The man did not show any arrogance this time too.

Therefore, where the tag came from, I do not know. But then, I have seen many people suffer this way because of the way they carry themselves. Most of these people are those who are confident and therefore simply intimidate those who come into contact with them.

I have worked with another such fellow in my life. DC Mulaisho is his name and a former editor of the Zimbabwe-based Southern Africa Economist. He later became the Governor of the Central Bank of Zambia.

Before joining the economist, DC, as he was called by all, had been an economist for the World Bank and worked as a technocrat in Zambia, where he comes from. For this reason, he knew exactly what he wanted from those who worked under him.

DC was also a perfectionist and so, for many people who could not meet his standards or face him, the conclusion was he was an arrogant man.

But this is the same man that met me in Accra, came to my level, offered me a job and we got on well because I did not see him as the arrogant person.

When l visited the Economist office in Harare, some of the people in the office did not understand how l got on so well with someone whom they all claim was arrogant. This was the man I have come to remember as building my career and I would have lost out on all that I learned and benefitted from him.

With this experience, l have come to judge people not based on what others say about them, but what l experience with them.

Spio-Garbrah would have to prove his detractors wrong by showing his good side. It means that, perhaps, he would have to change his style of dealing with people and win them over to his side. He must also prove that he is good at what he does to achieve results at his new ministry and that is the only way that the whole country would applaud him! 


Have a successful congress, NDC

Wednesday, 17 December 2014 13:07

BARRING any last-minute hitches, the ruling National Democratic Congress (NDC) will converge at the Baba Yara Stadium in Kumasi on Saturday to hold a National Congress to elect officers to run the affairs of the party for the next four years.

The twice-postponed congress faces the cloak of a legal threat from Emmanuel Aboagye Didieye, Member of Parliament (MP) for Afram Plains North and National Organiser aspirant, who sued the party after he had detected that his name and photograph had been left out of the National Organiser ballot paper.

At the last hearing, the court, presided over by Justice Anthony Oppong, adjourned the case to tomorrow, Thursday, December 18, after lawyer for Mr Didieyie, Bright Obeng, argued that his client was not served with the response of the defendant on time for them to study it and make an informed argument in court.

But, perhaps, the good news for the teeming followers of the party is the explanation given by Mr Didieye that he was not placing an injunction on the entire congress but on the National Organiser position.

Certainly, the other welcome development is the fact that the suit filed by one Yaw Osei Gyamfi to block Mr Kofi Adams from contesting the party’s upcoming election was withdrawn by the applicant yesterday, thus giving the National Organiser aspirant the all-clear for the showdown.

In all, some 100 people are vying for a little over 20 positions in the Functional Executive Committee of the party, with some 3,700 delegates deciding their fate.

Election watchers believe two positions will be keenly contested at Saturday’s event – those of the National Organiser and National Chairman.

For the National Organiser position, it will be a straight fight between the incumbent Yaw Boateng Gyan and Kofi Adams while the position of chairmanship, which is being contested by party bigwigs like incumbent Dr Kwabena Adjei, Dan Abodakpi, Huudu Yahaya and NADMO boss Kofi Portuphy, could turn out to be a three-horse race with Portuphy, Huudu Yahaya and Abodakpi taking centre stage.

Given the current economic hardship the nation is facing, The Finder is not surprised that certain groups in the party have cautioned delegates to elect leaders capable of retaining the party in power in the 2016 elections.

In a recent press release, one such group said: “Without doubt, the 2016 presidential and parliamentary elections will not be easy race for the NDC; a lot of work needs to be done in terms of strategic planning and grassroots organisation, to surmount the opposition that the New Patriotic Party (NPP) will offer in its desperate bid to win power.

“It has, therefore, become necessary to choose leaders with clout, verve, dynamism and knowledge of the terrain and who also could mobilise mass grassroots support, especially among floating voters, for the winning objective,” the group emphasised.

The Finder agrees with the sentiments expressed by the group, and we urge the delegates not to be influenced by financial considerations, but to let their votes reflect the supreme ideals of the party of probity, accountability and social justice.

We wish to also take this opportunity to remind the delegates that given the fact that the party’s recent election for the positions of Youth Organiser and Women’s Organiser were both won by candidates from the north, care must taken not to portray the party in the eyes of the ordinary Ghanaian as a party for northerners.

We wish the NDC well in Saturday’s congress and we hope the party will come out of the event stronger and more united in readiness for the bigger battle ahead in 2016.


How to price your products

Thursday, 22 January 2015 09:27

By Sydney Casely-Hayford.  This email address is being protected from spambots. You need JavaScript enabled to view it.

ONE of the secrets to business success is pricing your products properly. Price your products correctly and that can enhance how much you sell, creating the foundation for a business that will prosper. Get your pricing strategy wrong and you may create problems that your business may never be able to overcome.

It is probably the toughest thing there is to do, It is part art and part science.

There are a variety of different types of pricing strategies in business. However, there's no one surefire, formula-based approach that suits all types of products, businesses, or markets. Pricing your product usually involves considering certain key factors, including pinpointing your target customer, tracking how much competitors are charging, and understanding the relationship between quality and price. The good news is you have a great deal of flexibility in how you set your prices. That's also the bad news.

How to price your products: Meeting business goals

The first step is to get real clear about what you want to achieve with your pricing strategy: You want to make money. That's why you own a business. Making money means generating enough revenue from selling your products so that you can not only cover your costs, but take a profit and perhaps expand your business.

The biggest mistake many businesses make is to believe that price alone drives sales. Your ability to sell is what drives sales and that means hiring the right sales people and adopting the right sales strategy.

The first thing you have to understand is the selling price is a function of your ability to sell and nothing else.

At the same time, be aware of the risks that accompany making poor pricing decisions. There are two main pitfalls you can encounter – under pricing and over pricing.

Pricing your products for too low a cost can have a disastrous impact on your bottom line, even though business owners often believe this is what they ought to do in a down economy.  Accurately pricing your product is critical at any point in the economic cycle but no more so than in a recession. Many businesses mistakenly under price their products attempting to convince the consumer that their product is the least expensive alternative hoping to drive up volume; but more often than not it is simply perceived as “cheap”.

Remember that consumers want to feel that they are getting their "moneys worth" and most are unwilling to purchase from a seller they believe to have less value. Businesses also need to be very careful that they are fully covering their costs when pricing products.  Reducing prices to the point where you are giving away the product will not be in the firm's best interest long term.

On the flip side, overpricing a product can be just as detrimental since the buyer is always going to be looking at your competitors pricing. Pricing beyond the customer's desire to pay can also decrease sales. One pitfall is that business people will be tempted to price too high right out of the gate.

They think that they have to cover all the expenses of people who work for them, the lease, etc. and this is what price it takes to do all that. Put yourself in the customer's shoes. What would be a fair price to you? Take little surveys of customers with two or three questions on an index-card-sized form, asking them whether the pricing was fair.

Understand what you want out of your business when pricing your products. Aside from maximizing profits, it may be important for you to maximize market share with your product -- that may help you decrease your costs or it may result in what economists call "network effects," i.e. the value of your product increases as more people use it.

You may also want your product to be known for its quality, rather than just being the cheapest on the market. If so, you may want to price your product higher to reflect the quality. During a downturn, you may have other business priorities, such as sheer survival, so you may want to price your products to recoup enough to keep your company in business.