Let’s support SMEs for development
Small and medium enterprises (SMEs) play critical developmental roles in nation building.
Representing about 90 per cent of registered businesses and contributing about 70 per cent to GDP, SMEs are considered one of the backbones of Ghana’s economy.
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In terms of employment, they also account for more than half of all full time employment in the country.
But despite the immense contribution of the sector, SMEs are plagued with numerous challenges, ranging from access to credit, cost of credit, lack of managerial skills, lack of equipment, lack of technological know-how to regulatory issues, forcing most of them to collapse in the first few years.
A report by PwC (until recently PricewaterhouseCoopers) suggests that about 30 per cent of SMEs in the country fail in their first two years of operation. By the fifth year, the figure rises to 50 per cent and further increases to 66 per cent by the 10th year of operation.
This is not acceptable, and it is for this reason that the Daily Graphic would like to see innovative interventions to support our SMEs thrive.
Stanbic Bank Ghana is currently rolling out a Business Incubator Programme which seeks to reduce the failure rate of SMEs in the country. (See page 39 of last Friday’s edition.)
The programme, which operates on five pillars — ideation, incubation, acceleration, value chain and financial inclusion — is expected to create an enabling environment for SMEs to do well. It will provide services such as office space and management, technical and financial services for these SMEs for free.
Since its inception, the programme has already trained more than 1,200 entrepreneurs who have now established their own start-ups. It has also trained 2,923 youth on how to develop business ideas, empowered 790 women, while 375 businesses have received technical support through mentorship to shape those businesses.
The Daily Graphic believes that there cannot be any effective contribution to the development of the economy without empowering SMEs and so sees any commitment to support the growth of the sector as being in the right direction and must continue in order to enhance economic growth.
We are aware that many studies have shown that the provision of physical infrastructure, business assistance, management guidance and counselling, the enabling environment and sound practices by business incubation centres has led to the survival and growth of SMEs across the world and fostered entrepreneurship.
In our view, incubators help start-ups save on operation cost, as companies that are part of an incubator share the same facilities and overhead expenses such as utilities, office equipment rentals and receptionist services.
Additionally, since start-ups also need guidance on how to compete effectively with established industry players, incubation comes in handy here, as it provides the start-ups the opportunity to tap into the advice of experienced entrepreneurs and experts in their field of business.
Despite the numerous benefits of an incubator, the success of an incubator programme largely depends on the quality of services it is rendering and it is, therefore, the hope of the Daily Graphic that the Stanbic Business Incubator Programme will adopt the best practices needed to tackle the challenges of SMEs in the country.
We also call on other corporate institutions to follow Stanbic’s example and roll out more incubator programmes that will help build more businesses and create more employment opportunities.
This way, we will help address one of the biggest threats to our nascent democracy - unemployment - which has the potential to cause social instability.