The United Nations (UN) Resident Coordinator in Ghana, Charles Abani, has indicated that small and medium-scale enterprises (SMEs) are only able to access a paltry 0.41 percent of the required capital they need to scale up
He said sources of SME financing in Ghana, such as private equity and venture capital (PEVC) account, form an estimated US$25million per year; a small sum compared to the financing need of US$6.1billion.
Mr. Abani stressed that to overcome these challenges and unlock the private sector’s full potential, deliberate actions are essential to garner patient capital for the private sector.
He emphasised that SMEs generate significant revenue and profits, and remain a significant anchor to the local economy; however, without more funding their full potential cannot be harnessed for economic development and improved standards of living.
“In Ghana, although SMEs generate significant revenue and profits, they require an estimated US$6.1billion in financing to scale. In addition, other sources of SME financing in Ghana like the private equity and venture capital (PEVC) industry account for an estimated US$25million per year – a small sum compared to the financing need,” he said.
The UN rep maintains that small business solutions play a pivotal role in building a stronger and more inclusive global economy, catalysing progress toward the Sustainable Development Goals (SDG).
“SMEs are the backbone of economies, particularly in sub-Saharan Africa (SSA) where they are estimated to constitute 90 percent of businesses – employing 80 percent of the workforce and contributing 70 percent to gross domestic product (GDP); and nearly half, 46 percent, of these are owned by women.
“SMEs thus present opportunities for significant environmental, social & development impact and inclusive growth. Yet, often, their potential for contributing to broader societal goals is underestimated,” Mr. Abani added.
SDGs progress
Halfway to the 2030 Agenda deadline, the SDG Progress Report revealed that more than half the world is being left behind – and advancement has stalled or gone into reverse on more than 30 percent of the SDGs.
The UN office seeks to expand partnerships, support the private sector and leverage more capital as part of the SDGs financing agenda… key to achieving the 2030 agenda.
The UN in Ghana, through its strategic Sustainable Development Cooperation Framework (2023-2025) with government, provides opportunities to achieve its triple aim of inclusive economic transformation, equitable access to services and durable peace, while addressing the cross-cutting challenges of financing for the SDGs, climate change, digitalisation, urbanisation and ensuring no one – especially women, children, young people and persons with disability – is left behind.
Recommendations
To unlock the full potential of SMEs in pursuit of the SDGs, the report said they must be provided with the right tools, resources and enabling environment. It also recommended the promotion of innovative ecosystems – creating an environment where innovation thrives. This also involves nurturing partnerships between governments, academia and the private sector to drive technological advancements and creative solutions.
Others are capacity building and technical assistance; access to finance – taking pragmatic steps to enable SMEs access affordable credit; and the coordination of SMEs – pushing hard on greater coordination of SME programmes for economies of scale, to both increase investment volume and consolidate technical assistance activities.
