Let’s push for sustainable, well-capitalised SMEs
In many countries around the globe, small and medium-sized enterprises (SMEs) occupy a pride of place. They are also known to play critical roles in the development and growth of various economies.
SMEs represent an important vehicle for the achievement of national economic objectives. For instance, they help in employment generation which often helps to check rural-urban drift.
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Depending on their location, SMEs are able to spark economic activities which bring life to communities.
When it comes to income generation, SMEs are known to constitute major avenues for income generation and participation in economic activities in the lower income and rural brackets of developing societies, especially in the area of agriculture, trade and services.
In spite of these positives, SMEs, particularly in developing countries such as Ghana, lack the much needed capital to thrive.
Most often, they are forced to go for short-term loans at high interest rates and are compelled to invest in long-term projects. In the end, they are unable to survive and fold up.
In the area of taxes, SMEs suffer because the tax system is not patient with them. Cost of utilities for them is also priced at commercial rates and that also eats into their capital.
But, there have been many interventions by governments of Ghana to put SMEs on the right footing to deliver the kind of benefits associated with their existence.
Unfortunately, these have not yielded the much expected results.
One of the funds set up for SMEs in the country, the Venture Capital Fund, has not been able to deliver to its optimum for varied reasons, including the lack of funds from the government as the main contributor to the fund.
It is against this background that the Daily Graphic sees the call by panellists at the Graphic business-Stanbic Bank Breakfast Forum, held in Accra yesterday to find solutions to the many financial challenges of SMEs in the country, as being in the right direction.
At the forum, the panellists made a case for the establishment of a national equity fund to pool low-cost funds for SMEs to use in unlocking their potential and launching themselves into global giants.
This was strongly corroborated by participants in the forum, as they argued that the current financial structure failed to embrace the peculiarities of SMEs, resulting in the inability of these businesses to access funds for growth and survival, resulting in majority of them either being marginalised or falling off in their first few years of operation.
The Daily Graphic is of the view that the proposal, therefore, for the establishment of a National Equity Fund that will be a purely private sector initiative but with a national character to turn the situation around, must be considered strongly by all stakeholders.
Our belief is that such a structure will ensure that the proposed national equity fund will not be exposed to public sector bureaucracy and the political business cycle, which have the tendency to marginalise its effectiveness.
We fully believe in the call and expect to see some work initiated immediately by the proponents to make it functional to help grow our SMEs to be in a position to expand to reduce the mass unemployment in the country.