The Head of Research at the Ghana National Chamber of Commerce and Industry (GNCCI), Julius Lamptey has revealed that small, medium enterprises should resort to reinvesting in their businesses with cheaper capital to necessitate growth.
As part of his recommendation from the Chamber’s business pulse Index data which measures the relevance of government’s policies to the private sector, Mr. Lamptey indicated it has become imperative for businesses to expand and grow through reinvestments.
“I think for the data that we have seen, one key policy recommendation is that SMEs should be encouraged to reinvest with cheaper capital for faster growth and expansion because, one thing we found is that, even though SMEs are growing, they are not able to reinvest in their businesses.
“We also have to adopt the strategy whereby we seal off any operational leakages and also try to mitigate this risk exposures. We are also asking that there should be an easier access to finance so that SMEs can withstand the shocks. We are also working with government and all local and international partners to ensure that the growth potential of our SMEs are nurtured and also transitioned into value driven ones”.
Expounding on the Chamber’s findings on the Business Index, he noted about forty percent of businesses are likely to be affected once there are shocks within the system.
“What we have found as a chamber is that, our SMEs are largely growth driven with appreciable improvement in their historical sales, twelve months earnings and three years forecast on their company’s returns. So, what we also found out was that, about two out of three enterprises growth is also dynamic. What this means is that, in the event that there are shocks in the system, there are shocks in the economic cycles or in the industries, these SMEs, forty four percent of them may have their growths affected.
“So, what we are saying is that, largely, businesses or our enterprises are growth driven and they are less stable and this calls for us putting up structures in place or policies to support our SMEs to grow. If you should check the value index, you also notice that, businesses that are mainly big in terms of the corporate or large enterprises, they are more value driven. If you talk about the value driven, we are looking at their total asset base and we are also looking at their company turnover”.
The study, in his words, was done taking into account the data and company financials from the year 2013 up to 2019.
“So, we mobilized the data and what we have found is that data will give you an indication as to which area or which industries are resilient, which industries are also growth driven, which industries are dynamic. So, from the data that we have found, we can tell on authority or based on empirical data that manufacturing, wholesale and retailing, construction, then also professional services and the education industries, these are the most stable industries in the country.
“So whether COVID or no COVID, these industries will survive the test of time. What the data has also shown us is that there are other industries that are less stable and these are the industries we not focus our attention to help them survive, particularly in this COVID situation”.
That notwithstanding, he optimistically stated there’s hope for Ghana “in the sense that the SMEs are largely growth driven and we don’t have to stop there, but we have to move them into more value driven, move again to more sustainability and further to more stability”.
