K. T. Hammond — Minister, Trade and Industry
K. T. Hammond — Minister, Trade and Industry

How MSMEs are thriving amid economic challenges

Micro, Small, and Medium Enterprises (MSMEs) are the lifeblood of Ghana's economy, driving job creation, innovation, and significant contributions to the nation’s GDP.


These enterprises are the unsung heroes of economic development, fostering community growth and resilience. 

However, despite their crucial role, MSMEs face a myriad of challenges that threaten their stability and growth. 

From the chronic energy crises that disrupt operations to the heavy tax burdens, soaring interest rates, and the relentless depreciation of the cedi, the landscape for these businesses is fraught with difficulties.

This feature delves into the strategies MSMEs are employing to navigate these turbulent times. The study examines how these MSMEs are adapting to energy shortages, managing financial pressures, and finding innovative ways to remain competitive and sustainable. 

Moreover, the feature explores actionable recommendations that can help transform their operations, boost profitability, and ensure long-term sustainability. 

By understanding these challenges and the responses to them, we can gain insights into the resilience and ingenuity that define Ghanaian MSMEs and their pivotal role in the country's economic recovery and growth.

Energy crises: A persistent challenge

The intermittent power supply in Ghana, often referred to as “dumsor,” has been a significant hurdle for MSMEs. Businesses dependent on electricity, such as manufacturing and services, face increased operational costs due to the need for alternative power sources like generators. 

This situation not only raises production costs but also hampers productivity and competitiveness. To cope, many MSMEs are investing in renewable energy solutions such as solar panels. 

While the initial investment is substantial, the long-term benefits include reduced reliance on the unstable national grid and lower energy costs. 

Moreover, adopting energy-efficient practices and technologies can further mitigate the impact of energy crises.

Taxation: Navigating the burden

High taxation is another challenge that MSMEs in Ghana face. Many small business owners feel that the tax burden is disproportionate, considering their limited revenue. This sentiment is exacerbated by the lack of adequate support and incentives from the government. 

To manage taxation issues, MSMEs are increasingly seeking professional financial advice to ensure compliance while optimizing their tax liabilities. Some businesses are also advocating for policy changes through trade associations, aiming for more favorable tax regimes and better support structures.

Interest rates: The cost of borrowing

Access to affordable credit remains a significant barrier for MSMEs in Ghana. High interest rates make borrowing expensive, limiting the ability of these businesses to expand or even sustain their operations.

This issue is particularly acute for startups and small enterprises that lack substantial collateral. In response, some MSMEs are turning to microfinance institutions and savings and loan schemes that offer relatively lower interest rates compared to traditional banks.

Additionally, forming cooperatives can provide a collective bargaining power to negotiate better terms with financial institutions. Exploring alternative financing options like crowdfunding and venture capital can also provide much-needed capital at more favorable terms.

Cedi depreciation: The foreign exchange dilemma

The depreciation of the Ghanaian cedi against major currencies has been a persistent problem, affecting import-dependent businesses. Fluctuating exchange rates increase the cost of imported goods and raw materials, squeezing profit margins.

MSMEs are adopting various strategies to mitigate the impact of cedi depreciation. These include sourcing more raw materials locally to reduce reliance on imports, engaging in forward contracts to hedge against exchange rate volatility, and improving operational efficiency to cut costs. 

Diversifying their customer base to include foreign markets can also help generate foreign exchange revenue, thus protecting against local currency depreciation.

Recommendations for transformation and sustainability


To enhance the operations, profitability, and sustainability of MSMEs in Ghana, several strategic actions are recommended:

1. Digital Transformation:  Embracing digital technologies can streamline operations, enhance market reach, and improve customer engagement. Digital tools can also aid in financial management and data analysis, enabling better decision-making.

2. Capacity building: Continuous training and development programs for MSME owners and employees can improve skills and knowledge, driving innovation and efficiency. Government and private sector partnerships can facilitate access to such programs.

3. Access to finance: Establishing dedicated MSME funding schemes with lower interest rates and flexible repayment terms can provide the necessary capital for growth. Encouraging the development of venture capital and angel investor networks can also support entrepreneurial ventures.


4. Policy support: Advocacy for more MSME-friendly policies is crucial. This includes tax incentives, subsidies for renewable energy adoption, and simplified regulatory procedures. Effective implementation of existing policies and continuous dialogue between the government and the business community can foster a more conducive business environment.

5. Networking and collaboration: Forming alliances and networks can provide MSMEs with shared resources, market information, and collective bargaining power. Participating in trade associations and business forums can facilitate these collaborations.

6. Sustainable practices: Adopting environmentally sustainable practices can reduce operational costs and attract environmentally conscious customers. Government incentives for green initiatives can further support this transition.


MSMEs in Ghana are navigating a complex landscape of economic challenges. Despite the daunting hurdles of energy crises, high taxation, rising interest rates, and currency depreciation, these enterprises are showcasing remarkable resilience and adaptability.


By adopting innovative strategies, seeking alternative financing, advocating for supportive policies, and embracing digital and sustainable practices, MSMEs can not only survive but thrive in this turbulent environment.

The success stories emerging from these businesses underscore the potential for transformation. With continued support from both government and private sectors, enhanced access to affordable credit, and a focus on capacity building, MSMEs can play a pivotal role in revitalizing the Ghanaian economy.

Their resilience is not just a testament to their tenacity but also a beacon of hope for sustainable economic growth and recovery in Ghana.

As MSMEs harness the power of technology, leverage local resources, and engage in strategic collaborations, they will continue to drive innovation and competitiveness. Their journey, though fraught with challenges, is a powerful narrative of ingenuity and perseverance. 

The future of Ghana’s economic landscape will undoubtedly be shaped by the strength and dynamism of its MSMEs, making their success integral to the nation's broader development goals.

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