By Ishmael Yamson & Associates, a management consultants & investor advisors
Ghana’s vibrant entrepreneurship in trade and commerce has long been a cornerstone of the nation’s economy. The country’s business landscape is diverse, with micro, small, and medium enterprises (MSMEs) contributing significantly to economic activity. As of 2021, SMEs accounted for approximately 70percent of Ghana’s GDP and provided about 85percent of manufacturing employment, according to the Ghana Statistical Service (GSS). This substantial contribution underscores the importance of SMEs in the economic fabric of the country.
Currently, SMEs dominate the economy, comprising 90percent of all businesses in Ghana. These enterprises are vital, providing livelihoods, generating income, creating employment, and driving economic growth. Despite burdensome fiscal and monetary policies and occasionally restrictive regulatory frameworks, the private sector has demonstrated resilience and innovation, achieving significant efficiencies and growth. Looking forward to 2030, projections indicate that SMEs will continue to be pivotal in driving economic growth, with expected contributions rising to 75percent of GDP and an anticipated increase in employment provision to 90percent.
Elements of success stories
To build on past successes and navigate future challenges, there is a need to focus on creating new opportunities across various sectors. The examples set by businesses like Papaye and Spacefon in the 1990s illustrate the potential of strategic partnerships and innovative thinking. Key elements of these successful models include:
- Strategic partnerships: Collaborations with private sector players, leveraging entrepreneurial skills, capital, and market opportunities. For instance, the World Bank’s ‘Ghana Innovation Hub’ has provided financial and technical support to over 100 start-ups since 2019. By 2030, it is expected that such initiatives will support over 500 new start-ups, significantly boosting the entrepreneurial ecosystem.
- Long-term financial backing: Support from financial backers committed to sustainable profits, providing time and space for ideas to mature. The African Development Bank (AfDB) has pledged $600 million to support SMEs in Ghana between 2020 and 2025, with a further US$1billion projected by 2030, ensuring long-term capital availability for growth.
- Customer loyalty and trust: Building strong relationships with consumer bases, fostering loyalty through quality products and services. According to the Ghana Chamber of Commerce and Industry, consumer confidence in local products has been steadily increasing, with a reported 20percent growth in the patronage of locally made goods from 2015 to 2020. Projections suggest a continued annual growth rate of 10percent in consumer trust and loyalty towards local products by 2030.
- Public sector engagement: Establishing clear business models that build trust with public sector entities, facilitating access to contracts and support. The Public Procurement Authority of Ghana reported that in 2021, SMEs received 45percent of all government contracts, up from 30percent in 2015. The goal is to increase this share to 60percent by 2030, further integrating SMEs into the national economic strategy.
- Technological integration: Utilizing technology to bridge knowledge gaps, attract funding, and enhance business operations. The Ministry of Communications’ 2020 report indicated a 30percent increase in internet penetration in Ghana over the past five years, facilitating the digital transformation of many SMEs. By 2030, internet penetration is expected to reach 80percent, driving further digital adoption across all business sectors.
- Access to infrastructure: Ensuring access to essential business and social infrastructure, including power, telecommunications, R&D, and human capital development. The Ghana Investment Promotion Centre (GIPC) has noted an influx of US$1.5 billion in infrastructure investments between 2018 and 2022. Projections indicate a continued increase, reaching US$5 billion by 2030, significantly improving the business environment.
The emerging future
Looking forward to 2030, several key shifts are expected to transform Ghana’s entrepreneurial landscape:
- Diversifying the GDP base: Expanding income sources and economic activities across various sectors. The Ghana Economic Forum anticipates a 10percent annual growth in non-traditional exports, such as technology services and agribusiness, by 2025, with further diversification leading to a 20percent contribution to GDP from these sectors by 2030.
- Driving social change: Creating new communities that reshape work, leisure, and commerce. According to the World Economic Forum, Ghana’s urban population is expected to grow by 4.1percent annually, driving demand for innovative urban solutions. By 2030, it is anticipated that 60percent of the population will reside in urban areas, necessitating significant advancements in infrastructure and social services.
- Scaling up MSMEs: Enhancing the scale and efficiency of micro, small, and medium enterprises to accelerate economic development. The National Board for Small Scale Industries (NBSSI) projects a 15percent annual growth in SME output by 2025, with projections extending this trend to a 20percent annual growth rate by 2030.
- Regulatory evolution: Encouraging regulators to adopt more supportive roles in nurturing entrepreneurship. The World Bank’s Doing Business Report 2021 ranked Ghana 118th out of 190 economies, indicating areas for improvement in business regulations. The goal is to improve Ghana’s ranking to within the top 100 by 2030 through streamlined regulations and supportive policies.
- Creating secure employment: Establishing an environment where working individuals have access to secure, well-paying jobs. The International Labour Organization (ILO) reported that the informal sector still employs about 80percent of the workforce, highlighting the need for formal employment opportunities. By 2030, efforts aim to reduce informal employment to 50percent, with a corresponding increase in formal job opportunities.
The role of C-Suite executives in supporting SMEs
Senior C-suite executives play a crucial role in fostering a conducive environment for SMEs to thrive. Their influence and resources can shape policies, create partnerships, and support initiatives that empower Ghanaian entrepreneurs. Key supportive roles and actions include:
- Policy advocacy: C-suite executives can leverage their positions to advocate for policies that support SME growth, such as tax incentives, reduced regulatory burdens, and improved access to finance. Their engagement with policymakers can ensure that the unique needs of SMEs are considered in national economic strategies.
- Mentorship and capacity building: By offering mentorship and capacity-building programs, executives can help SMEs enhance their business skills and operational capabilities. Initiatives like executive-led workshops, mentorship programs, and business incubation can provide invaluable guidance and support to emerging entrepreneurs.
- Corporate Social Responsibility (CSR): Executives can incorporate CSR initiatives that focus on SME development. This could include providing funding for start-up incubators, supporting educational programs that build entrepreneurial skills, or partnering with NGOs to offer training and resources to small business owners.
- Investment and partnership: C-suite executives can foster partnerships between large corporations and SMEs, facilitating access to markets, technology, and expertise. By investing in SMEs, they can help these businesses scale up and integrate into larger supply chains, enhancing their growth potential.
- Innovation and digital transformation: Executives can lead initiatives that promote innovation and digital transformation within SMEs. By investing in technology and digital tools, they can help SMEs improve efficiency, expand their reach, and compete in the global market.
Concrete actions and projections for C-Suite executives
To ensure that these strategies are not merely aspirational, C-suite executives must commit to concrete actions and measurable outcomes. This includes:
- Setting clear targets: Establish specific goals for SME engagement, such as allocating a percentage of procurement budgets to SME suppliers or committing a fixed amount of corporate resources to SME development programs.
- Regular monitoring and reporting: Implement mechanisms to regularly track and report on the progress of SME support initiatives. This transparency will help maintain accountability and ensure that targets are met.
- Resource allocation: Dedicate specific financial and human resources to support SME initiatives. This could involve setting up dedicated teams or funds focused on SME partnerships and development.
- Public commitments: Make public commitments to SME support, such as pledging to mentor a certain number of entrepreneurs each year or partnering with specific SME sectors to foster innovation and growth.
- Engaging with stakeholders: Collaborate with government agencies, NGOs, and other stakeholders to align SME support initiatives with broader national development goals.
Sustainable transformation
By taking these actions, C-suite executives will not only contribute to the growth and sustainability of SMEs but also ensure that their companies are at the forefront of Ghana’s economic transformation. The time to act is now; the opportunities are clear, and the benefits are substantial. With a concerted effort from the top levels of corporate leadership, Ghana can achieve its vision of a robust, diversified, and inclusive economy by 2030.
>>>this article is written by Ishmael Yamson & Associates, a management consultants & investor advisors
