Harnessing the Growth of SMEs in Ghana-Issues and Strategies. A Study of Firms in the Local Food Service Industry

Abstract

Small and Medium Size Enterprises (SMEs) play an important role in the economic development of nations. In Ghana SMEs are the key providers of employment and income, and the drivers of innovation and growth in the economy. Observing from statistics available however, it is very disturbing to note that the failure rate of SME businesses is quite high, while surviving SMEs are not able to sufficiently expand to provide the needed employment necessary to stimulate economic growth. Against this background, the study was undertaken to investigate the issues militating against the growth of SMEs particularly in the Local Food and bakery industry in Ghana and to recommend effective strategies to harness the growth of SMEs and their contribution to economic growth. In undertaking the research, questionnaire was administered to 120 owners and operators of local food services (chop bars) and bakeries in and around the following major towns; Accra central, Osu, Circle, Abeka lapaz, Medina, Kaneshie, Odorkor, Awoshie and Achimota, all densely populated suburbs in the Greater Accra Region of Ghana. Random sampling technique was used in selecting the businesses in view of the unavailability of an official register of SMEs involved in chop bar and bakery businesses. From the research, it was found that the industry is female dominated. Female entrepreneurs constitute 72% of the owners and operators of the businesses. Also profitability in the industry is very good, 54% of the business are making profits. However, a number of factors have been identified as hampering the growth and survival of firms in the industry. These include; low managerial skills and training, weak succession and strategic planning, poor book keeping, limited access to finance, high utility charges, harassment from officials from state regulatory agencies and low level of business with government, the highest spender in the economy. Recommendations to improve the industry have been grouped under three main headings; improving the capacities of the SMEs, improving access to finance and improving government support to the SMEs.