213 SME executives advocate mobilisation fund
A new research that seeks to advocate a level playing field for local businesses has identified high operating costs, poor infrastructure, rapid tax increases and access to affordable financing as some of the systemic challenges hampering the growth and competitiveness of small businesses in Ghana.
“The challenges sit firmly on the government agenda, and action must be taken if Ghana is to maintain its reputation as a positive place to do business,” a study by Invest in Africa, a programme by a consortium of businesses which seeks to address the cross-sector challenges of doing business in Africa, has recommended.
Making use of the qualitative views of 213 SME leaders/founders in Ghana’s key commercial locations of Accra, Kumasi, Takoradi and Tema, the respondents also called for a fund to serve as a source of mobilisation money for start projects which small and medium scale enterprises (SMEs) can access to participate in government and big transactions.
The study, code-named “David & Goliath: Creating a level playing field for Ghanaian SMEs”, found that there was a fundamental communication gap between multinational companies (MNCs) and SMEs which wish to do business with them.
David & Goliath seeks to gain a real-time insight into the difficulties faced by SME business leaders in Ghana, as captured in their own words. Invest in Africa (IIA) was founded in 2012 by Tullow Oil, and its Global Partners include Lonrho, EY (Ernst & Young), and Ecobank. It is working together to address the cross -sector challenges of doing business in Africa. Its local partners are the Ghana Investment Promotion Centre (GIPC), the Association of Ghana Industries (AGI), Guinness Ghana Breweries Ltd (GGBL), and UT Bank.
“Ghanaian business leaders certainly do not doubt the opportunity presented by working with large multinationals yet 77 per cent of those interviewed admit they face serious problems when trying to win business from such clients,” the research points out.
The communication gap stemmed from the fact that international players failed to take the time or make the effort to open up their tender processes. The condition leads to inertia, leaving contracts in the hands of the same old group of local suppliers who understand the unwritten rules of how to work with MNCs.
At the same time, ambitious SMEs with untapped potential lie hidden from sight by inflexible processes and expectations.
The study which identifies the information gap starts from the initial processes, where most of the SMEs admit they regularly fail to hear about or receive tender correspondence documents from international companies working in Ghana.
“This excludes them from transacting before they have even been given a chance,” the research points out.
The research, undertaken between November last year and February 2014, also recommends continuous learning and capacity building for growing companies to share the best practices in the industry, while asking the government or the Association of Ghana Industries (AGI) to create a kind of guarantee for SMEs to enable them to access loans from the banks more easily.
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