ABSTRACT
Micro, Small and Medium Scale
Enterprises contributes a colossal percentage to Gross Domestic Product (GDP)
in ensuring economic growth, employment, income stability and poverty reduction
in most developing countries like Ghana. It is in line with this that this
study identifies the contributions of these industries and come out with ways
and means, which will sustain the vibrancy for SMEs so that they play the
expected vital roles as the engine of growth in our economic development.
In order to investigate the
contributions, a conceptual and theoretical framework of the study was
designed. These guided the design of data collection instrument to suit the
research. The study combined survey and case study methods of data collection
and analysis. The study revealed among other things that: high female and youth
domination, low level of education among entrepreneurs and lack of qualified
personnel. The study also brought to light some major contributions of the
sector which includes employment creation, revenue generation, poverty
reduction and sustainable economic development systems among others.
In view of these massive
contributions, major recommendations proposed include the need for; setting up
a common board to regulate the activities of the SMEs support institution,
Metropolitan and Municipal level to support SMEs activities, establishment of
SMEs Bank in Ghana, literacy training
for entrepreneurs and formation of SMEs policies to control them.
Finally, effective implementation of
the recommendation could lead to a further improvement of the SMEs sector in
the Sunyani Municipality and eventually result in creation of more employment
as well as poverty reduction in Ghana.
TABLE OF CONTENTS
CHAPTER
ONE:
INTRODUCTION
1.0
Background of the Study
1.1
Problem Statement
1.2
Research Questions
1.3
Research Objective
1.4
Significance of the Study
1.5
Limitations
1.6
Organisation of the Study
CHAPTER TWO:
LITERATURE REVIEW
2.0
Introduction
2.1
Definitions and Classification of SMEs In Global Context
2.2
Definition of SMEs in Ghanaian Context
2.3
Operational Definition of SMEs
2.4
SMEs Development in Ghana
2.5
Challenges of SMEs
2.6
Role of SMEs to Economic Development
2.6.1
Employment
2.6.2
Revenue
2.6.3
Productive Use of Scarce Resources
2.6.4
Poverty Reduction and Sustainable Economic Development Systems
CHAPTER THREE: METHODOLOGY
3.0 Introduction
3.1 Scope
3.2 Research Design
3.3 Sample Population
3.4 Sampling & Sampling Techniques
3.5 Data Collection
3.6 Instrumentation
3.7 Data Analysis
3.8 Timetable or Timescale
3.9 Limitations
3.10 Delimitations
References
CHAPTER ONE
INTRODUCTION
1.0 Background of the Study
There is growing recognition of the important role
Small Scale and Medium Scale Enterprises (SMEs) play in economic development.
They are often described as efficient and prolific job creators, the seeds of
big businesses and the fuel of national economic engines. Even in the developed
industrial economies, SMEssector is the largest employer of workers. Interest
in the role of SMEs in the development process continues to be in the forefront
of policy debates in most countries. Governments at all levels have undertaken
initiatives to promote the growth of SMEs (Feeney and Riding, 1997: Carsamer,
2009).
Micro, Small and Medium Enterprises (SMEs) in Ghana
are said to be a characteristic feature of the production landscape and have
been noted to provide about 85% of manufacturing employment of Ghana (Aryeetey,
2001). SMEs are also believed to contribute about 70% to Ghana’s Gross Domestic
Product (GDP) and account for about 92% of businesses in Ghana(Cook and Nixson,
2000).SMEs therefore having a crucial role to play in stimulating growth,
generating employment and contributing to poverty alleviation, given their
economic weight in African countries. SMEs development can encourage the
process of both inter and intra-regional decentralization; and, reckon force in
catching up with economic superpowers of larger economies in the developed
world.
More generally, the
development of SMEs is seen as accelerating the achievement of wider
socioeconomic objectives, including poverty alleviation (Cook and Nixson,
2000). A lot has been said and written about SMEsthe world over. It has also
formed the subject of discussions in so many seminars and workshops both
locally and internationally. In the same token, governments at various levels
(local, state and regional levels) have in one way or the other focused on the
Micro and Small Enterprises (SMEs). Governments almost all over the world are
formulating policies which are aiming at facilitating and empowering the
growth, development and performance of the SMEs. Some of the government’s
efforts relate to focus on assisting the SMEs to grow through soft loans,
managerial training and other fiscal incentives through support from
international agencies and organizations like World Bank and United Nations
Industrial Development Organisation (UNIDO).
Perhaps, no other development strategy
has enjoyed as much prominence in Ghana’s development plans as the Small Scale and Medium Enterprises (SMEs) in
recent years, particularly since the adoption of the economic reform programme
in Ghana from year 2000, there has been a decisive switch of emphasis from the
grandiose, capital intensive, large scale industrial project based on the
philosophy of import substitution to micro and small scale enterprises with
immense potentials for developing domestic linkages for rapid, sustainable
industrial development. There exist lots
of business organization that are been engaged by individuals, group of people
or association; industries and Government with the aim of maximizing profit.
These business enterprises range from Small to Medium and from Medium to Large
scale.
It
has however been worrisome that despite the incentives, policies, programmes
and support aimed at revamping the SMEs, they have performed rather below
expectation in Ghana. Different people, organisations, and operators have
advanced various reasons as to why SMEs have not been able to live up to their
expectations. While an average operator will always hinge his failure on lack
of access to finance, some others think otherwise arguing that inappropriate
management skills, huge some of foreign substitute goods, lack of
entrepreneurial skills and know how, poor infrastructure etc. are largely
responsible.
Some others have argued that the bane of
SMEs in Ghana is the lack of long-term loans since most loans in the Ghana
market are short-term while what SMEs require to grow and become really
successful is long-term patient capital. The key ones include inadequate
infrastructural facilities (road water electricity etc.), insecurity of lives and
property, inconsistent monetary, fiscal and industrial policies, limited access
to markets, multiple taxation and levies, lack of modern technology for
processing and preserving products, policy reversals, capacity limitations,
data inadequacies, harsh operating environment, fragile ownership base, fragile
capital base.
While some of the challenges that SMEs face
are induced by the operating environment (government policies, globalization
effects, financial institutions, local government policies, attitude to work
etc.), other challenges are driven by the inherent characteristics of the SMEs
themselves but in the mist of all this challenges there has been enormous
development or contributions due to (SMEs) it is with this issue that the
researcher wish to look at the contributions of SMEs in Ghana.
1.1 Problem Statement
Micro,
Small and Medium Scale Enterprises (SMEs) has over the years suffered to an
extent leading to their collapse since they have not performed creditably well
and hence have not played the expected vital role in the economic growth and
development of Ghana. This situation has been of great concern to the
government, citizenry, operators, practitioners and the organised private
sector groups. Year in year out, government’s, non-governmental organizations
and other donor countries have made budgetary allocations, policies and
pronouncements with the aim of promoting the growth of SMEs due to the crucial
role of the SMEs sub-sector of the economy.
There
have also been fiscal incentives, grants, bilateral and multilateral agencies
support, aids as well as specialized institutions all geared towards making the
SMEs sub-sector vibrant. Just as it has
been a great concern to all and sundry to promote the welfare of SMEs, it has
also been a great cause of concern to all about
the fact that this vital sub-sector has
fallen short of expectation. The situation is more disturbing and worrying when
compared with what other developing and developed countries have been able to
achieve with their SMEs.
The
poor performance of SMEs in the face of numerous policies by different groups
like government, Non-governmental organizations and other donor countries means
that if Ghana wants to achieve an appreciable success towards attaining the
Vision 2015 goals, then one way will be to vigorously pursue the development of
its SMEs properly. The underperformance SMEs may indeed make Ghana’s vision be
a mirage unless there is a turnaround of our SMEs fortunes sooner than later.
The time is now to do something surgical operation to the situation of our SMEs
given the aggravating level of poverty in Ghana and the need to meet up with
the Vision 2015 Goals.
In
spite of all this challenges that SMEs face there has been an immense
contribution in the percentage to Gross Domestic Product (GDP) in ensuring
growth, employment and income stability of a country. In view of the fact that
SMEs are labour demanding, they are more likely to succeed in smaller urban
centers and rural areas, where they can contribute to a more even distribution
of economic activity in a country and can help to slow the flow of migration to
large cities. SMEs
also improved the efficiency of domestic markets and make productive use of
scarce resources, thus facilitating long-term economic growth. SMEs also seem
to have advantages over their large-scale competitors in that they are able to
adapt more easily to market conditions, given their broadly skilled
technologies. They are able to withstand adverse economic conditions because of
their flexible nature. The sector has the potential to contribute towards
reducing poverty among both rural and urban cities in most developing countries
like Ghana and others in the sub-Sahara Africa.
In the face of these numerous
challenges, little is known about the actual and main contribution of SMEs to
the development in Ghana. There must be some survival strategies, which are not
known to many SMEs promoters. This research is also intended to explore and
unravel some of the key business survival strategies which are of vital role to
SMEs growth and development. Theunraveling of key business survival strategies
of SMEs will enable reduction to the barest minimum, unemployment and the
poverty situation in the country because of the immense contribution of the
sub-sector to their economic growth and development. This means that a lot more
needs to be done including a paradigm shift in the focus and administration or
implementation of the policies and programmes to the more vibrant ways of
developing SMEs in Ghana. It is in line with the foregoing that the study
therefore looks at the contributions of SMEs in Ghana.
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