Ghana has taken a significant step to bolster its Micro, Small, and Medium-sized Enterprises (MSMEs) by reclassifying them through a new regulatory instrument.
The Legislative Instrument (LI) known as the Ghana Enterprises Agency Classification of Micro, Small, and Medium-sized Enterprises Regulation, 2023, LI 2470, aims to streamline the classification of MSMEs.
This move is in recognition of the evolving business landscape and is intended to attract local and international investment, facilitate better data analysis for policy formulation, and create a more conducive environment for MSMEs to thrive.
The launch of this new regulation coincided with the commemoration of the 2024 International MSME Day in Accra. The theme for this year’s event was “MSMEs and SDGs: Leveraging the Power and Resilience of MSMEs to Accelerate Sustainable Development and Eradicate Poverty in Times of Multiple Crises.” Under the new LI, the classification standards for MSMEs have been updated to reflect current economic realities.
Micro Enterprises are defined as businesses with permanent employees ranging from one to five persons and either a turnover or fixed asset value of up to GHS 150,000. Small Enterprises are businesses with permanent employees between six and thirty persons, a turnover of more than GHS 150,000 and up to GHS 6 million, and a fixed asset value up to GHS 6 million.
Medium Enterprises are businesses with permanent employees between 31 and 100 persons, a turnover of more than GHS 6 million and up to GHS 18 million, and a fixed asset value up to GHS 18 million. Additionally, enterprises exceeding 100 employees or a turnover or fixed asset value beyond GHS 18 million are also classified as medium enterprises.
Addressing Policy Inconsistencies
Speaking at the event, Mr. Kobina Tahir Hammond, Minister of Trade and Industry, emphasized that the new classification was necessary to address policy inconsistencies and tailor government and development partner interventions to the needs of MSMEs. He noted that this reclassification was driven by economic expansion, population growth, and technological advancements.
Mr. Hammond highlighted the critical role MSMEs play in Ghana’s economy, constituting about 90 percent of businesses, 80 percent of the workforce, and 70 percent of the country’s Gross Domestic Product (GDP). To enhance their contribution, the Ghana Enterprises Agency (GEA) has been repositioned to facilitate financial assistance, provide capacity building, and improve market access for MSMEs.
Empowering MSMEs for Sustainable Growth
Mrs. Kosi Yankey-Ayeh, Chief Executive Officer (CEO) of the GEA, underscored the importance of the new classification, noting that Ghana had not redefined what constitutes an MSME for the past 30 years. She stressed that without a clear definition, it was challenging to design effective policy interventions. The new classification provides direction and creates more opportunities for MSMEs to grow. It also enables the GEA to develop new tools to support these enterprises.
Mrs. Yankey-Ayeh highlighted the pivotal role of MSMEs in sustainable development and poverty eradication. She stressed the need to facilitate the growth of businesses from micro to small, and from small to medium, to drive overall economic progress.
Supporting Industrialization and Innovation
The Minister of Trade and Industry lauded the innovation and commitment of Ghanaian youth in leading the transformation of the MSME sector. He reiterated the government’s commitment to empowering and supporting them to contribute to Ghana’s industrialization agenda. By fostering a supportive environment for MSMEs, the government aims to harness their potential for driving sustainable development.
Mr. Seth Twum-Akwaboah, CEO of the Association of Ghana Industries (AGI), noted that the reclassification would help clearly define MSMEs, enabling the provision of tailored assistance. It would also facilitate appropriate tax assessments, thereby encouraging tax compliance and increasing government revenue to support development projects and MSMEs.
Ghana’s reclassification of MSMEs represents a forward-thinking approach to addressing the challenges faced by these enterprises and unlocking their potential for driving sustainable development. By streamlining the classification, enhancing policy support, and fostering an enabling environment, the government is paving the way for MSMEs to thrive and contribute significantly to the nation’s economic growth.
READ ALSO: Societe Generale Ghana Leads in Volume Amid GSE Trading Slump
