Local businesses advised to open up to investors

January 19, 2016
Source: Benson Afful | B&FT Online | Ghana
Local businesses advised to open up to investors

Local business owners have been advised to embrace a paradigm-shift and open up to the concept of sharing their businesses with valuable investors.

A report published by Boutique Investment and Advisory firm in collaboration with Optimum Access Investments, to provide local business owners with an insight into the many options available to finance growth, said investors can bring expertise and invaluable contacts to push a growing business to the next level.

Optimum Access provides advice to clients that are seeking access to expansion capital, and in its report said: “It is better to own 30 percent of a US$10million business than to own 100 percent of a small business struggling to make a profit”.

According to the report, in Ghana the usual citing of ‘lack of access to credit’ implies that businesses are mainly open to debt financing. Loans have historically been a hindrance rather than assistance to local Ghanaian businesses with the exorbitant fees and rates that prevail in the system. Established business owners requiring expansion capital need to better understand the financing options open to them, of which there are several.

It further reveals that in terms of focus on skills development, it's the skills required to run successful businesses for long-term growth which are paramount to drive Ghana's private sector capacity forward.

It said local business owners should embrace and adopt the concept of actually paying for expertise to help them improve their capacity to steer their businesses toward long-term growth. This is especially critical for technical, financial and director-level management capacity.

“There are innovative ways for established local businesses to access investment finance and the skills capacity required to expand and grow.

“Local high net worth individuals and corporates are also challenged to step up to the plate and partner with advisory firms to navigate the risks, put in place mitigating measures, and improve their business investment choices.

“In the current financial and economic environment, it is indeed the easy option to put money in Treasury-bills or invest in piecemeal CSR projects. However, Ghana needs local ‘Investment Dragons’ to act as catalysts to increase real economy/private sector growth, substitute imports, create quality jobs and improve Ghana’s economy for progression of the nation today and for posterity,” it added.

With about 90 percent of registered companies in Ghana falling into the SME category, according to the Registrar-General’s Department, SMEs employ more than 80 percent of the economy’s total workforce and contribute about 50 percent of the nation’s total GDP.

In spite of the enormous contributions SMEs make to the economy, their efforts are hardly recognised due to challenges that include lack of access to credit, weak management skills, and inability to acquire modern technologies and technical know-how.