The idea of small business development in Ghana has been in existence since the 1970s (Kayanula and Quartey, 2000), however, the implementation of policies geared toward the development of the small business sector has not been encouraging. Despite this, key institutions have been set up to facilitate small business development. Recently, the small business sector has been redefined to develop local entrepreneurial skills needed for sustained industrialisation. The government of Ghana has put the following technical, institutional and financial support mechanisms in order to achieve its private-led development economic strategy. The sections that follow next discuss these technical, institutional and financial mechanisms.
2.7.1.1 Government Support
The government of Ghana has strengthened the small business sector’s competitiveness through its policy framework. Several measures have been taken that aimed at strengthening the small business sector in contributing to employment growth.These measures includ the setting up of the Private Sector Advisory Group and the abolition of the Manufacturing Industry Act, 1971 (Act, 356).
The Export Development and Investment Fund (EDIF) was established in 1997 to offer financial suoport to small exporting firms in Ghana. The Ghanaian Budget Statement (1998) revealed that specific attention was given to textiles/garments, wood and wood processing, food processing industries which in turn could tap support from EDIF. This was done through EDIF which aimed at rationalising the tariff regime with the view to improving their export competitiveness (Kayanula and Quartey, 2000).
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Additionally, several attempts have been made to close the skill gap in the small business sector through programmes aimed at skills training and registration of small business owners (World Bank, 2010). Through this initiative, small business owners are able to register for free skill training in the various skills training institutions such as the National Vocational and Training Institute (NVTI). This training is aimed at helping entrepreneurs develop basic management skills.
2.7.1.2 Government Institutions Supporting Small Businesses
During the 1970s institutions such The Office of Business Promotion, and Ghana Enterprise Development Commission were set up to aid entrepreneurs enter fields mainly dominated by foreigners. The Ghana Enterprise Development Commission was also established to strengthen small businesses capacity through financial and technical support. Additionally, the National Board for Small Scale Industries (NBSSI), Ghana Appropriate Technology Industrial Service (GRATIS) Foundation and the Rural Enterprises Project (REP) were established to aid small business development.
The NBSSI was established for the promotion and development of the small business sector in Ghana. The NBSSI supports small businesses with technical and advisory services through its regional Business Advisory Centres located in the ten regions of Ghana. The NBSSI has also established an Entrepreneurial Development Programme to train individuals or groups with entrepreneurial agendas. It offers training to small business owners on business planning, book keeping and other business advisory services.
Further, the GRATIS Foundation was established upgrade small business capacity through the transfer of appropriate technology to small scale businesses. The GRATIS Foundation promotes industrialisation through training. It was found to supervise the Intermediate Technology Transfer Centres (ITTUs) which has been changed to Regional Technology
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Transfer Centres (RTTCs). With offices in nine regions in Ghana, the RTTSs provide short and long term training for small business owner-managers in areas such as textiles, pottery and soap making. The RTTCs also provide engineering services to small scale manufacturing and service industries engaged in vehicle repairs and vehicle repair services.
In addition, the Rural Enterprise Project (REP) was established to provide capacity building training to small business entrepreneurs in rural areas by improving the wealth and living conditions of these entrepreneurs. The REP provides services such as technology transfer, support for apprenticeship training and small financing scheme for entrepreneurs. The REP receives financial support from African Development Bank (AFDB), International Fund for Agricultural Development (IFAD) and Government of Ghana. There has been collaboration between the Rural Enterprise Project and institutions such as the NBSSI and GRATIS Foundation to provide support for small business growth and development in Ghana.
2.7.1.3 Financial Assistance to Small Businesses
Access to credit has been a major barrier to small business development in Ghana (Abor and Quartey, 2010; Robson and Obeng, 2008; World Bank, 2010). Strict collateral loan requirement makes it virtually impossible for small businesses to acquire loans from banks because most small businesses lack collateral to meet this requirement. To address this issue, the Government of Ghana and some donor agencies have put in place several financial programmes that seek to provide financial assistance to small businesses. Table 2.1 presents various government financial support agencies that offer financial assistance to small businesses in Ghana.
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Table 2. 1: Government Financial Support Agencies
Financial Support Agency/Donor Agency
Function
Eximguaranty Company
Offers credit guarantees through lending financial institutions for loans. It contributes to enhancing the capacity of small business via modernisation of small business operations and expansion of their production capacity
Export Development and Investment Fund
Responsible for the facilitation, development and promotion of Ghanaian exports through provision of financial resources for exports. Microfinance and Small Loans Centre
(MASLOC)
MASLOC implements the Government of Ghana’s microfinance programmes with the view to reducing poverty, creating jobs and wealth.
Micro, Small and Medium Enterprise Project
It promotes the competitiveness of Micro, Small and Medium Enterprises (MSMEs) through financial support
Business Sector Advocacy Fund (BUSAC)
Support small businesses to develop income generation activity through credit advancement Ghana Venture Capital Trust Fund The Venture Capital Trust Fund was established
by ACT 680, 2004 by the Government of Ghana to provide low cost financing to SMEs. The Fund operates a scheme for equity investment of $25,000-$200,000 through five venture capital funds.
Ghana Private Sector Development Facility
A credit facility financed by the Italian government for Ghanaian private Small and Medium Enterprises (SMEs).
Source: Author’s own compilation
2.7.1.4 Private Institutions Supporting Small Businesses
Enterprise promotion been a central objective to enhance economic development in sub- Saharan Africa (Chipika and Wilson, 2006; Obeng and Blundel, 2015). To achieve this feet, the government of Ghana recognises the small business sector as a major development partner if it would achieve its development agenda. The private sector has been facilitating
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the development of small businesses by offering business development services for micro, small and medium enterprises with the view to making these businesses competitive and contributing to employment growth.
Support service provision by private institutions include quality assurance, information communication technology (ICT), book keeping and financial management, research and development, legal services, business planning, training, market research and sales. Table 2.2 provides service providers and the service mix of these organisations to small businesses.
Table 2. 2: Support Service Providers and Service Mix
Organisation Service Mix
Support Programme for Enterprise Empowerment and Development (SPEED)
SPEED focuses on enhancing value chains in tourism and wood products, providing loans to non- banking institutions.
United States African Development Foundation (USADF)
The organisation gives grants to SMEs and non- governmental organisations to help improve management system and offering of advice on financial management to SMEs
Association of Ghana Industries (AGI)
The main services provided by AGI to SMEs include policy advocacy, information dissemination and trade promotion.
Empretec Foundation (Ghana) Business advice for small businesses including training, financial management and book keeping, business planning and export support.
Ghana Tourism Federation (GHATOF)
The services provided by GHATOF include lobbying, advocacy, marketing and promotion of legislations on SMEs in the tourism industry. Ghana Association of Consultants The association offers business advice to small
businesses in areas such as growth strategies, training, book keeping, financial management, marketing, research and development, businesses restructuring, and legal services
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