Ghana: Government, big corporations crowd out SMEs
SMEs form about 92 per cent of registered companies in Ghana and contribute significantly to employment creation and sustainable development in the West African country, which is struggling to provide jobs to its teeming unemployed youth.
About 85 per cent of jobs in the country are being created by the SMEs and they also contribute 70 per cent to the nation’s gross domestic product (GDP), according to Mike Nyinaku, chief executive officer of Beige Capital, local financial institution.
“When the SME sector is booming, other dependent industries such as management consulting, tax preparation, auditing, advertising and banking also thrive,” he told participants at an international conference in Accra on Thursday.
However, he said SMEs borrow at exorbitant costs and are often dwarfed or crowded out by the government and big corporations in terms financial access, leading to many going to SME banking.
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But the only way to solve the problem, Nyinaku said, is for the government to reduce its dependency on commercial banks and provide tax incentives to the financial institutions that are willing to offer very flexible and favourable credit to the SMEs despite the increased risk.