Abstract:
This paper estimates the effect of indigenous risk management practices (used by entrepreneurs)
on small firm growth amid the current economic crisis in Ghana. The paper hypothesizes that
indigenous risk management practices positively affect the growth of informal micro and small
agri-food processing firms during the current economic crisis in Ghana. Cross–sectional and
limited panel data (covering four years – from the end of 2019 to the end of 2022) have been used
in the analysis. Firm Growth has been estimated using sales volume and the number of employees.
Findings indicate that apart from savings for business purposes as an indigenous risk management
strategy, diversification of economic activities, subscription to formal insurance, forward con tracting, cooperative marketing, borrowing, sale of assets, and temporary wage employment
outside the business exert a positive influence on small firm growth in terms of sales. Subscription
to formal insurance and temporary wages outside the entrepreneur’s business positively influence
firm growth as related to growth in employee size. We recommend that policymakers design and
implement policies that initiate and facilitate the development of marketing cooperatives to
negotiate fair prices. This essential tool can help mitigate marketing risks to the agri-food pro cessing entrepreneur. The police should facilitate rolling out skills development programs to
increase entrepreneurs’ capacities in forward contracting arrangements. Again, entrepreneurs of
agri-food processing firms in the wider Ghanaian population should be educated on the need to
subscribe to formal insurance to insulate them in times of property loss or personal accidents.
