Despite the widely acknowledged view that access to funding is a major challenge to entrepreneurs, Dr. Jerry Monfant, CEO of MBIC Group, maintains that small businesses need more protection from government to survive.
Speaking at the 10th edition of the Ghana Economic Forum organised by the B&FT in Accra under the theme ‘Strengthening homegrown to underpin the national digitisation drive and shared financial prosperity’, Dr. Monfant noted that government must make a conscious effort through policies, industry connections, among other means, to protect infant businesses against failure as a sure means of strengthening the economy.
“Businesses grow by what we call productivity, and productivity has got to do with profitability. You have rent going up, you have wages going up, and you have fuel going up. And if these factors go by faster than profitability, it slows down businesses. This becomes one of the challenges for young entrepreneurs.
“And from where I am and from what I view, funding is not enough to keep the business sustainable. It is not only about financing; you need protection. The array of funding startup enterprises involves more than just money; they need protection, industry connections.
“Regarding the way we can revolve and resolve the situation of young industrialist people that we have today and try as much as possible to build a formidable economy, what we will need is more policy than what has been outlined,” Dr. Monfant said.
Touching on the theme ‘Contemporary approaches to financing Startups’, Dr. Monfant likened growing infant industries to raising children – saying like children are nurtured and protected by their parents, startups also need to be guided and protected by good policies before being left to stand on their own.
He further charged government to do business with more local companies, and not only focus on governance, in order to grow the economy.
“We need the theory of creative destruction; we need to destroy the old foundation and start with a new one to revive and support the economy,” he added.
Also speaking on financing entrepreneurship during the plenary, Nana Dwemoh Benneh, Managing Director of UMB Ghana, bemoaned some bad practices of small businesses in their bids to attract financing.
He noted that many startup businesses do not choose the appropriate financing for their businesses, a situation that makes it challenging for banks to help them and for them to be sustainable.
“The mistake that’s often made is that, sometimes, we try and use the short-term financing to finance long-term needs; and before long, obviously, the short-term funding will require repayment and you would not have finished what it is that you are trying to build.
“And so, what we try and encourage is for most entrepreneurs to look at the various forms of financing and choose the one that is appropriate for what their need is at the moment. When you want to attract patient capital, it requires discipline and knowledge,” he stated.