By Ephraim Ofori NUMOSUOR
Ghana’s economy is built on the hard work and resilience of small and medium enterprises (SMEs). From the corner shop owner in Accra to the agro-processing factory in Tamale, SMEs form the backbone of job creation, innovation, and local industrialization. Yet, despite their critical role in economic growth, they face a steep uphill battle, limited access to affordable financing, bureaucratic bottlenecks, and stiff competition from foreign imports.
While government programs have attempted to address these challenges, much remains to be done. A National SME Growth Fund, designed as a structured, sustainable financial support system, could be the game-changer Ghana needs. With the right policies, partnerships, and governance, this fund could unleash the full potential of Ghanaian enterprises, creating jobs and fostering economic transformation.
The importance of SMEs in Ghana’s economy
SMEs account for about 85percent of businesses in Ghana and contribute significantly to employment and GDP. However, despite their dominance, they struggle with basic necessities like financing, market access, and skill development. The high cost of credit often exceeding 20percent interest rates from banks, has crippled the growth potential of many promising businesses.
A survey by the Ghana Statistical Service found that nearly 80percent of SMEs cite limited financing as their biggest hurdle. Without proper capital, businesses cannot invest in expansion, technology, or workforce training. The result? Stagnation, high business failure rates, and slow economic progress.
Learning from global success stories
Countries that have successfully transformed their economies have done so by empowering SMEs. Take Malaysia, for example. The SME Development Bank Malaysia provides businesses with low-interest loans, training, and export support, allowing local industries to thrive. South Korea’s SME-focused policies helped build global brands like Samsung and Hyundai, proving that with the right support, SMEs can grow into major economic drivers.
Closer to home, Rwanda’s Business Development Fund (BDF) provides guarantees and direct financing for startups and SMEs, reducing the risk for commercial banks and attracting investment into the sector. Ghana can learn from these models and design a homegrown SME Growth Fund tailored to our unique economic landscape.
What would a National SME Growth Fund look like?
A well-structured SME Growth Fund should not just be another short-term government initiative. It must be a sustainable, long-term mechanism backed by public-private partnerships and efficient governance. Here’s how it can work:
- Low-interest financing: Provide SMEs with loans at interest rates below 10percent, significantly lower than current commercial rates.
- Public-private investment: Encourage banks, pension funds, and development finance institutions to invest in the fund.
- Sector-specific support: Focus on key industries like agribusiness, manufacturing, technology, and tourism to align with national economic priorities.
- Capacity building: Include mentorship programs, business training, and access to modern technology to improve SME efficiency.
- Export support: Facilitate market entry for Ghanaian SMEs by linking them with regional and international trade opportunities.
The potential economic impact
Implementing a National SME Growth Fund could drive Ghana’s industrialization agenda, increase formal employment, and reduce dependence on imports. Key benefits include:
- Job creation: A well-funded SME sector could generate millions of jobs, especially for young people.
- Economic diversification: Supporting SMEs in various industries reduces over-reliance on primary commodities like cocoa and gold.
- Wealth creation: Empowering local businesses leads to economic independence and reduced inequality.
- Increased tax revenue: A thriving SME sector contributes more to government revenue through corporate taxes and VAT.
A call to action for policymakers
Ghana stands at a crossroads. With a rapidly growing population and increasing global competition, we must prioritize policies that drive local business growth and economic self-sufficiency. A National SME Growth Fund is not just an option; it is a necessity. The government, financial institutions, and private sector players must collaborate to make this vision a reality. If we truly want to build a robust economy where Ghanaian businesses compete on the global stage, the time to act is now. Let’s invest in our SMEs. Let’s invest in Ghana’s future.
>>>the writer is a Financial Economist and Research & Policy Analyst. he can be reached via [email protected] and or 0248803710
