As businesses brace up to stay afloat amid fears that the continuous downgrading of the economy could tighten access to credit, micro, small and medium enterprises (MSMEs) have been urged to consider partnerships to survive.
About 70 percent of all industrial establishments in the country are micro, small and medium enterprises – providing over 85 percent of manufacturing jobs, and contributing to 70 percent of GDP.
Acknowledging the impact of the recent downgrades on the MSMEs due to surging interest costs on domestic debt and a prolonged lack of access to Eurobond markets which had been the country’s regular source of external financing, the Executive Director of the Ghana Startup Network, Solomon Adjei, said the time has come for the MSMEs in the country to prioritise partnerships if they are to survive the current turmoil in the economy.
“Ratings like this that paint deficient and somehow gloomy economic situation to foreign investors would make it difficult for them to come in. And that’s a cause for worry and it’s a big blow,” he stated.
“To ensure that it doesn’t affect the sector, MSMEs must be willing to give away shares, and partner with others to scale. But that’s where most of the time, our people are not willing to or don’t want to open up to such partnerships; everybody wants to be on their own as the CEO. But, it’s time to understand that partnership is key,” he added.
He said there must be deliberate policy to educate MSMEs about the importance of partnership if the sector is to play a major role in the African Continental Free Trade Area, and also lead the country’s economic recovery.
“It’s very important that we encourage our people to start thinking beyond the box of being called a CEO of a US$1,000 company, and rather hold a 10 percent or 40 percent share in a US$100,000 company. It’s time we start looking beyond such thinking for the better of the Ghanaian economy and its sustainability,” he said.
The CEO of Crescendo Consult Ltd., Mrs. Doris Ahiati, on her part, urged MSMEs to look out for collaborations and partnerships that can help their businesses stay afloat, saying that would help them bounce back better when the economy sees the light of day because they would not have to start afresh.
Acknowledging the difficulties MSMEs might be dealing with, she was of the view that closing their shops is not an option; however, they should explore every available option to sail through.
“My recommendation to MSMEs is to not close their shops. It is very tempting to quit because it is tough and rough. It is easy to close shops, but that is not an option; explore all that is possible besides quitting or closing shops.
Already, some have reduced the scale of operations, and it is a way to go. You do not have enough cash flow to support the usual rate of operation, demand is not supportive, and not to even talk of the cost you have to cover. You might be a food vendor who used to serve 100 people a day but now you can adequately manage 10; go ahead with that. Or say you have a processing plant and used to process many tonnes but now can only manage half of that, just reduce the size but do not fold up,” she advised.
She noted that it is also crucial to be innovative so they can deal with the rising costs, and also explore and pursue innovations to stand the test of time.
For those who owe banks or other financial institutions, she advised that they have an open discussion with them to find a way out instead of hiding and putting up excuses.