Financing small and medium enterprises smes in ghana. While some banks, such as unibank ghana and standard chartered, offer special loan products for small businesses, commercial banks as a whole are hesitant to lend to the sme sector given the lack of credit history, or are only willing to do so at interest rates even higher than the alreadyelevated average in ghana. Unfortunately, smes today also face a number of barriers on their quest to growthfrom poor access to finance to low managerial. The results show that quoted firms exhibit higher debt ratios than those of smes. Finance minister, ken oforiatta on wednesday, november presented governments financial policy statement for the year 2020. Report on support to smes in developing countries through. As in the case of europe, those enterprises which employ less than 250 employees, the socalled smes, have been the main source of employment growth within the nonfinancial sector in the european economy. With nearly 10 million smes contributing to 23% of the gdp, 80% of jobs in the industries sector and 25% of the total labor force, the sme finance policy will play a pivotal role in enhance sme financing. Oecd ilibrary oecd sme and entrepreneurship papers. Smes in ghana have been noted to provide about 85% of. Using the url or doi link below will ensure access to this page indefinitely. Smes account for a greater share of businesses in south africa, ghana, and nigeria abor and quartey, 2010, gbandi and amissah, 2014 and their contribution to gdp, in ghana for example, stood at about 49% in 2012.
Impact of government and other institutions support on. Access to finance for smes by the world bank, ghana office this paper has been jointly produce by acet and world bank, and sponsored by the acet way. Download financing small and medium enterprises smes in ghana. Small and mediumsized enterprises smes are big business in ghana. This is a hindrance to the international competitiveness of exporting smes in developing countries such as ghana. Depending on the country, governments may use a range of policies to encourage growth of smes. Contribution of smes to economic development in ghana pdf.
Once more, the agi 2006 looked at the dynamic position of smes in improving nations and defined it as the engines through which the development goals can be accomplished. For example, in the european union eu a business with fewer than 250 employees is considered an sme, while in the united states an sme has fewer than 500 employees. Entrepreneurship has been generally recognized as one of the most important dynamics leading to development. Oct 07, 2019 the findings reveal inadequate costefficient sources of nontraditional horticultural export financing for smes. Pdf effect of legal and regulatory framework on smes. The role of microfinance institutions george kwadwo anane university of energy and natural resources, sunyani ghana patrick brandful cobbinah school of environmental sciences, institute for land, water and society, charles sturt university, alburywodonga, australia. Chapter three compares the capital structures of large, quoted firms and smes in ghana. Basically the research focuses on sunyani municipality as the main area of study, but it will also cover the problems of smes for the other parts of the world under the same main purpose of this research.
Simple random sampling technique was employed in selecting the 70 smes and 30 mfis that constituted the sample size of the research. Small and medium enterprises play an important role in the development of a country. Smes play a significant role is a number of economic development issues that face south africa as a nation. Sme that are larger than micro companies, and either part of or heading towards the formal economy. The focus of the study is to examine the impact of government and other institutions support on the performance of small and mediumsized enterprises in agribusiness sector of ghana. Red tape, corruption, complex entry regulations etc. The impact of microfinance on the development of small and. Smes in taizhou, zhejiang, the largest home of smes in china. Role of information and communication technology ict in the survival of small and medium scale enterprises sme s in ghana. The role of information and communication technology in. The sme sector has contributed immensely to job creation, poverty alleviation and assisting in the prosperity of the nation. Micro, small and medium enterprises activities, income. From evidence to action small and mediumsized enterprises are engines of growth and job creation in developing countries, particularly in ghana today. Research evidence was gathered via a questionnairebased survey of selected agribusiness companies in ghana.
However, very little empirical analysis, that is, hypothesis testing has been carried out to ascertain the relationship between finance and enterprise performance. A major barrier to rapid development of the sme sector is a shortage of both debt and equity financing. The high failure rate of small and medium enterprises smes in ghana is alarming, despite copious government policy and stimulus schemes directed at smes. Pdf a study of financial accounting practices of small.
Bureaucracy, unstable policy climate, unfriendly customs and trade regulations, tight monetary and credit policies, corruption, and excessive tax regimes, workforce and labour regulations were found to negatively affect smes growth in ghana. Finance and development research programme working paper series paper no 15 the policy environment for promoting small and mediumsized enterprises in ghana and malawi dalitso kayanula and peter quartey idpm, university of manchester may 2000. Prospects and challenges of smes in 21st century africa. Interest in the role of small and mediumsized enterprises smes in the development process. E country report, the first of a series of publications assessing smes competitiveness. Such impressive performance was partly contributed to the robust growth of the sme sector in ghana. As per statistics from the united nations economic commission for africa 2010, ghanas gdp grew at an annual rate of 5. In nigeria for instance, an sme is defined based on the staff strength and the asset base of the organization. Challenges affecting sme s growth in ghana andy ohemeng asare school of management and economics, university of electronic science and technology of china, chengdu, china. This situation has been of great concern to the government, citizenry, operators, practitioners and the. Findings confirmed the existence of formal institutions that support smes in ghana. Small and mediumsized enterprises smes account for over 95% of firms and 60%70% of employment and generate a large share of new jobs in oecd economies. The study then reveals that the smes with higher financial risk and lower level of productivity are more likely the firms to seek microfinance.
Share on facebook share on twitter share on whatsapp. In addition, effective and coordinated support from export promotion agencies was found to be critical. List of best small business in accra, ghana, top small business in accra, ghana, small business near me, best small business. A clear definition is also essential so that entities that are not small or mediumsized entities, and therefore are not eligible to use the ifrs for smes, do not assert that they are in compliance with it see paragraph 1. For an economy to live up to expectation in the committee of nations development, such economy must achieve accelerated economic growth and development which is a prerequisite for improving quality of life. It also explains the various challenges that hinders the development of smes in ghana, the contributions made to the economy of ghana by the small and medium enterprises smes and the available sources of finance to the. The factors influencing sme failure in south africa. The role of government and the international competitiveness. European journal of accounting auditing and finance research vol. For instance the features and mode of operation of small businesses in ghana makes the paper to adopt the definition by the nbssi. Whether they deal in services or manufacturing, exporting smes show higher total revenues, faster total revenue growth, and higher labor productivity than their nonexporting sme counterparts. For the sme, it is evident that level of education and gender of the entrepreneur, industry, and location of the firm are also important in explaining their capital structure. D managing consultant sem international associates limited accra, ghana.
Challenges faced by the small and medium enterprises smes in malaysia. Yet empirical research on how innovation types impact the different aspects of small and medium enterprises smes performance is still underresearched, particularly in emerging economies. All books are in clear copy here, and all files are secure so dont worry about it. A small to midsize enterprise sme is a business that maintains revenues, assets, or number of employees below a certain level. Smes in developing countries, however, face significant barriers to finance. The national board for small scale industries nbssi which is the regulatory body for smes in ghana defines smes in terms of both fixed asset and number of employees. A study of financial accounting practices of small and medium scale enterprises smes in ho municipality, ghana.
The growth of smes is also important for the world economy which has been widely discussed in recent years. In the region, smes are severely hampered by a weakly developed business environment. Smes in ghana have also been noted to provide about 85 per cent of manufacturing employment, contribute about 70 per cent to ghanas gdp, and therefore have catalytic impacts on economic growth, income and employment. Effect of legal and regulatory framework on smes growth in. In view of the significance of smes in ghana, this study sought to find out the contribution of smes to the economic development of ghana with particular reference to zebilla in the bawku west district of northern ghana, pdf this paper discusses the characteristics, contributions of smes to economic development, and the constraints to sme. The fundamental objective of this study is to assess the impact of microfinance on small and medium enterprises smes in ghana, using a case study of the ledzorkukukrowor municipal assembly. Examining business performance of micro, small and medium. Ifrs for smes 2009 institute of chartered accountants, ghana. The main focus of this research is to explore the nature and the characteristics of smes together with the financial constraints facing the smes. Ghana boosts financial support for sme development ghana. European journal of accounting auditing and finance.
Smes can bring about economic growth and national developments in ghana. Small and medium enterprises smes in nigeria have not performed creditably well and hence have not played the expected vital and vibrant role in the economic growth and development of nigeria. Factors affecting the performance of small and medium enterprises in the jua kali sector in nakuru town, kenya anne ngima kinyua egerton university nakuru town campus college department of accounting, finance and management science abstract. Possibly the greatest shift in the final standard was that the iasb considered this to be a stand. Read online financing small and medium enterprises smes in ghana. This report uses itc data on small and mediumsized enterprise sme competitiveness at macro, meso and microlevel to derisk investment decisions. Valley view university, accra, ghana abstract this study examined the institutional framework for promoting small and mediumscale enterprises in ghana from the perspectives of smes. Small business is any business that employs up to 29 people. Abstract issues of finance and small and mediumsized enterprises smes in developing countries have dominated the research agenda at various policy levels. The national board of small scale industries nbssi defines smes as enterprises that employ no more than 29 workers, with investment. Ghana, ethiopia, uganda, vietnam, indonesia, india and bangladesh. Key issues facing sme development in ghana challenges. Oida international journal of sustainable development, vol.
Small business in accra, ghana list of small business ghana. At the inclusive agribusiness centre, we support startups and smes within the agricultural value chain in ghana with business development advic. Research on innovation is up surging in recent years in management literature. Smes in terms of employee size, turnover andor total balance sheet european union 2003. Sme is an engine of social and economic development in africa. Smes are vital to achieving decent and productive employment as they globally account for two. A number of new initiatives, including educational programmes and a specialised support fund for small and mediumsized enterprises smes, have been established to promote the growth and diversification of small businesses in ghana. Pdf issues in sme development in ghana and south africa.
It is concluded that for smes growth to thrive, sound legal and regulatory systems are needed. A 1992 study by the ghana statistical service revealed that nearly 93 percent of all registered businesses in ghana are of the sme category. Evidence from selected small and medium scale enterprises in new juaben municipality, koforidua by kwaku nuamahgyambrah1, martin offei otu2, florence agyeiwaa3. Third, we identify the most important obstacles to sme growth in subsaharan africa. Mr owusuagyeman made the appeal on wednesday in accra at the third edition of the graphic business. Although the problems smes face in accessing finance are well known, still there are some research gaps that need to be filled. Due to the nature of ghana s economy it is difficult to quantify just how important they are, but estimates suggest 70% of all gdp contributions come from such enterprises. It is estimated that smes make up 70 % of ghana s gdp and 92 % of its businesses. The criteria for determining an sme varies among countries and industries. Bangladesh lacked a single policy with systemic plan to enhance sme finance. Challenges affecting smes growth in ghana by andy asare. They have specific strengths and weaknesses that may require special policy responses.
They also make up 91 % of formalized businesses in south africa and 70 % of the manufacturing sector in nigeria. Smes in ghana have been noted to provide about 85% of manufacturing employment of ghana. Impact of innovation types on smes performance in the cape. Issues in sme development in ghana and south africa. The series provides comparative evidence and analysis on sme and entrepreneurship performance and trends and on a broad range of policy areas, including sme financing, innovation, productivity, skills, internationalisation, and others. Factors affecting the performance of small and medium. The theoretical framework of the study explained the various definitions of smes and how ghana as a country classifies smes. Sep 27, 2019 because of their contribution to the economy, greater difficulty in obtaining financing, and higher fixed cost of taxation and regulatory compliance, smes are often given incentives and more favorable tax treatment. Hence, this study attempts to find out the consequences of the entrepreneur and firm. Financial constraints are higher in developing countries in general, but smes are particularly constrained by gaps in the financial system such as high administrative costs, high collateral requirements and lack of. Many organisations claim to be supportive of smes or sme friendly and yet in practice few actually understand the terrain and offer truly valuable assistance needed to grow businesses. The impact of microfinance on the development of small. The study sought to explore the effect of legal and regulatory.
Eiplic focuses on manufacturing small and mediumsized enterprises smes in lics. According to the study, despite the fact that there are numerous challenges affecting this sector. However, promoting entrepreneurship depends on an enabling business climate. E the itc competitiveness grid, used in this report, shows that enterprise performance depends not only on firm competitiveness but also on external factors linked to the immediate business environment and. The nbssi 1998 provided an operational definition of sme to include the following. Smes, this is due to the fact that entrepreneurs are not able to turn their businesses into sustainable venture. Full 2020 budget statement and economic policy the ghana. The contributions of small and medium scale enterprises to economic growth. Promoting innovation in these enterprises has a particularly positive impact on development szirmai et al. Following a discussion paper in 2004, and an exposure draft in 2007, the ifrs for smes standard was issued in july 2009. Chapter four examines the determinants of bank financing of smes in ghana.
398 734 1255 820 744 1431 1401 879 1601 447 729 1087 1269 207 1311 282 1481 437 234 1373 349 143 317 1190 380 1460 385 852 242 296 221 1002 1238 667 173 665 790 1367 1 392 54 195 66 1357 900 1131