Preparing SMEs for oil, gas sector

A total of 134 small and medium scale enterprises (SMEs) across the country have registered with the Enterprise Development Centre (EDC) to receive training tailored to the oil and gas industry.
The Ministry of Energy and Petroleum with support from the Jubilee Partners, established the centre in the Western Region to offer free training programme for SMEs in Ghana to enable them to participate in the industry as part of the local content policy.

According to the Director of the centre, Daavi Shika Acolatse, the focus is to build the capacity of the SMEs to position them well to take advantage of the business opportunities in the oil and gas sector.

“This involves providing a range of services, access to market and information and the centre will also act as a focal point for coordination between the SMEs and the oil and gas companies, its contracts and sub-contractors,” Daavi Acolatse said.

The country’s small and medium scale enterprises are one of the largest employers in the economy.

In the developed economies such as Europe, countries such as the United Kingdom, it was Germany among others, small and medium businesses are recognised as the main drivers of growth and development.

In recent studies into the sector by Freedman studies and others in the United Kingdom, confirm that small businesses account for the highest number of registered companies and make significant contributions to economic growth and prosperity in the developed world.

In Ghana, statistics at the Registrar General’s Department suggests that more than 92 per cent of companies registered are micro, small and medium enterprises.

SMEs in Ghana have also been noted to provide about 85 per cent of manufacturing employment, contribute about 70 per cent to Ghana’s GDP and, therefore, have catalytic impacts on economic growth, income and employment.

It is, therefore, imperative that SMEs are equipped to participate in the opportunities in the upstream, mid and downstream oil and gas value chains.

The role of the EDC Centre

Inaugurated barely three months ago, the centre would first identify the opportunities in the new oil and gas sector and provide facilitation for the SMEs after the training for their participation.

The training provided are bespoke and well researched and covers a wide range of areas such as the managing of small-business enterprises, business ethics, legal compliance, budgeting and financial management, business spreadsheet applications, business planning, information management using database, responding to bidding enquiries, writing proposals, contract management and quality management.

The director mentioned other areas such as the introduction of the industry, oil and gas accounting, contract processes, terms and conditions as well as the fundamentals of offshore environment, health and safety policy and requirements.

Daavi Acolatse explained that there were various stages of getting support from the centre and that SMEs had to  register with the centre first, describe the products and services they provide and their experiences and qualifications.

She said with such details, the EDC officials would review the oil and gas companies, contract requirements and identify where the SMEs fit in.

Contracts

However, the centre has made it clear that going through the training does not automatically guarantee oil and gas contracts for the SMEs.

“When training and development activities are completed, the EDC will communicate this to the oil companies and contractors who may consider including an SME in their procurement process,” she said.

Some of the participants told the GRAPHIC BUSINESS that the EDC was one of the best things that the government came up with, admitting that majority of how they conducted their businesses were wrong and that each entrepreneur wanted to go solo instead of forming partnerships to make their operations stronger.

“We realised that in our line of business, record keeping, putting ourselves on salary and distinguishing the business from personal or domestic issues help in the good and ethical business practice,” some of them said.

Some of the opportunities

The upstream covers the exploration to production, exploration, appraisal, development, production, which are more technical and require few highly skilled hands from the rouste about to the toolpusher.

The downstream sector comes in the form of transportation and logistics as well as tankers and pipeline services to support the industry.

After the discovery of oil in commercial quantities in 2007, players from the small-scale sector and big players clamoured for the business and many Ghanaian SMEs were elbowed out of the way due to lack of capacity.

Challenges

He said many in the small scale sector always complained of lack of access to finance and also competed with the high interest rate which made it difficult for them to stand strong and take part in the industry.

Mr Van-Ess said it was sad that, while the interest rates in the country were going through the roof; their counterparts in developed world had it under control.

“I can’t tell you that aside these challenges, the Ghanaian SMEs operate in an environment that makes it difficult for them to attract the attentions of people who have the money.”

SMEs in the country also lack the business knowledge, managerial skills to enable them write good proposals and develop good marketing strategies to stay in business and also wants to go solo instead of considering mergers.

A visit by BUSINESS GRAPHIC, some of the SMEs in the Western Region who supported the industry as sub-contractors, revealed that many of the SMEs did not even have records of the names of the companies they worked with; there simply have no records.

By Moses Dotsey Aklorbortu/Graphic Business/Ghana