The Institute of Statistical, Social, and Economic Research (ISSER) has called upon the Ghanaian government to take a more strategic approach in supporting small and medium-sized enterprises (SMEs).
Recognizing the crucial role that SMEs play in the nation’s economic growth, ISSER emphasizes the importance of directing financial assistance to enterprises with proven track records. This recommendation was articulated in ISSER’s analysis of the mid-year budget review presented by Finance Minister Dr. Mohammed Amin Adam to Parliament.
ISSER’s primary recommendation revolves around the careful disbursement of government funds. The institute stresses that financial support should be allocated to SMEs with established performance histories, rather than being distributed indiscriminately to newly established businesses with no track record. According to ISSER, leveraging existing databases of SMEs can prevent the misallocation of funds, ensuring that resources are directed to businesses that have demonstrated resilience and success over time.
This approach aligns with the government’s ongoing efforts to bolster the SME sector through initiatives such as the SME Growth and Opportunity Programme, the Ghana Enterprise Agency’s YouStart Programme, and the Ghana Skills Development Fund. These programs have provided various forms of business services and funding to SMEs, with the aim of enhancing their operational capacity and profitability. However, ISSER argues that a more focused approach, favoring businesses with a history of performance, would yield greater returns.
Disbursing Funds Through Financial Institutions
To ensure that government funds are used effectively and repaid in a timely manner, ISSER advocates for the disbursement of financial support through established financial institutions, including development banks.
This recommendation is based on the belief that financial institutions are better equipped to oversee the proper use of funds and to enforce repayment schedules. By involving these institutions, the government can create a more sustainable framework for SME support, reducing the risk of funds being misused or failing to generate the intended economic impact.
ISSER’s recommendations also highlight the need for targeted support within specific sectors. The institute suggests that government funding should prioritize SMEs engaged in high-value activities such as agriculture, light manufacturing, hospitality, tourism, and digitalisation.
These sectors, which are seen as critical to Ghana’s long-term economic development, offer significant opportunities for growth and value addition. By concentrating resources in these areas, the government can foster the development of industries that contribute more substantially to the national economy.
The focus on these sectors is also intended to prevent funds from being channeled to low-value activities, such as importation by merchants and wholesalers. ISSER argues that supporting high-value industries will not only create jobs and stimulate economic activity but also reduce the nation’s dependency on imports, thereby improving trade balances and fostering economic resilience.
Leveraging Digital Technology for a Business-Friendly Environment
In addition to targeted financial support, ISSER underscores the importance of creating a business-friendly environment that attracts both domestic and foreign investment. The institute advises the government to continue leveraging digital technology as a means of enhancing the business environment. Digital solutions can streamline operations, reduce costs, and open up new markets for SMEs, making them more competitive both locally and globally.
Moreover, ISSER points out that digital technology can play a crucial role in generating capital for labor-intensive and high-growth industries, particularly in sectors like agro-processing, light manufacturing, tourism, hospitality, and ICT. By fostering innovation and improving access to capital, the government can help SMEs expand their operations and contribute more significantly to the economy.
By focusing on businesses with proven track records, disbursing funds through financial institutions, prioritizing high-value sectors, and leveraging digital technology, the government can ensure that its efforts to support SMEs are both effective and sustainable. These measures will not only help SMEs grow but will also contribute to the broader goal of economic development and resilience in Ghana. As the government continues to refine its strategies for SME support, ISSER’s insights offer valuable guidance on how to maximize the impact of these initiatives.
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