Government urged to support SMEs with pragmatic policies

There should be real and genuine policies that are aimed at supporting small and medium enterprises in the country, the General Manager Operations of Kina Group, Mr Nuamah Eshun-Famiyeh, has stated.

He said for SMEs to expand and thrive in the country, there was the need to introduce more targeted interventions in the sector.

Speaking in an interview with the Daily Graphic ahead of the Graphic Business/Stanbic Bank Breakfast meeting on August 6, he said some of the interventions should be in the area of utility charges.

“SMEs must not be made to pay the same utility tariffs as Club 100 companies.

This is one of the major challenges of the sector,” he stated.

How critical is capital

Commenting on how critical capital is to the survival of SMEs, Mr Eshun-Famiyeh said the importance of capital to the survival of SMEs depended on the sector in which the business was operating.

He said SMEs in the services sector did not need much capital to operate while those in the manufacturing sectors needed excess capital to survive.

Mr Eshun-Famiyeh noted that access to funding in itself was not a challenge.

Instead, he said the challenge was rather the high cost of capital in the country.

He said banks in the country were charging high interest rates which had made it impossible for owners of SMEs to record profits.

“Owners of SME businesses rarely make profit.

Those who are making the money are the banks and the employees,” he stated.

Graphic Business/Stanbic Bank breakfast meeting

The Graphic Business/Stanbic Bank Ghana, scheduled for August 6, 2019 at the Labadi Beach Hotel in Accra, is expected to bring together experts from academia, policy think tanks and civil society organisations (CSOs) to fashion out how the country can build an equity fund to address the finance challenges of SMEs.

As a result, it will be held on the theme: “Building a national equity fund to support small and medium enterprises”.

Speakers for the forum include the Dean of the University of Ghana Business School, Professor J. Nyingma Bawole; the General Manager Operations of Kina Group, Mr Nuamah Eshun-Famiyeh; Partner/Director at PWC, Private Company Services Leader for West Africa Region, Mr Edward Gomado, and a Consultant to the International Finance Corporation, Mr Neustadt Amarteifio.

SMEs in Ghana

SMEs remain the major avenue of employment and can absorb a chunk of the unemployed youth if supported, as all over the world SMEs are increasingly being recognised as productive drivers of economic growth and development.

Despite the immense contribution of SMEs to the growth of the economy, the sector still faces a myriad of challenges which have stifled growth in the sector and in effect slowed down the growth of the economy.

One of such problems, and perhaps the most pertinent over the years, has been the difficulty and near impossibility of having access to finance, especially fresh capital to start up or expand an existing business.

Unfortunately, the country presently cannot boast of a national equity fund as it pertains in some other countries the world over.

In these countries, mostly in the developed world, the presence of such an equity fund has been the springboard for the growth of SMEs.

Aside providing the needed capital which is the fuel that drives businesses, the fund also provides the framework for financing SMEs.

Previous attempts

Ironically, the closest the country has come to establishing and operating such a fund was the setting up of a venture capital fund which was to provide capital for SMEs.

This fund has, however, been insufficient to address the funding needs of SMEs, prompting calls for the need to set up a national equity fund to support the sector.