As the government prepares to launch the first phase of the flagship Small and Medium Enterprise Growth and Opportunity (SME GO) Programme, Emeritus Professor in Economics and former Vice Chancellor of the University of Ghana, Prof. Ernest Aryeetey has admonished the authorities to focus on efficiency and not just numbers.
The SME GO programme is spearheaded by the Ministries of Finance and Trade and is aimed at providing financial and technical support to SMEs in Ghana to propel economic growth and development.
The programme which will be implemented by the Ghana Enterprises Agency (GEA), Development Bank Ghana (DBG), and Ghana EXIM Bank is expected to disburse a little over GHC 8 billion to the beneficiary businesses through loans and grants. The beneficiaries will also benefit from managerial and technical support.
But Prof. Emeritus Aryeetey, speaking at the 2nd Quarterly Economic Roundtable at the University of Ghana contended that the support of the government should not only be fixated on providing financial assistance to a large number of SMEs although he recognizes it to be important.
The former VC of the University of Ghana explains that many SMEs in Ghana and across West Africa, according to the available data die within ten years after establishment. The few that are able to make it beyond ten years have a very low possibility of transitioning into large companies.
“SMEs are likely to die within 10 years. Even if they live beyond 10 years, the likelihood that they will be transitioning from being micro or small to medium is very low. Large firms in Ghana began as large firms because some entity or some rich man or woman either from Ghana or outside came and invested a large amount in the factory and employed about 200 people. Very few firms in Ghana have made that transition,” he indicated.
This challenge, the renowned economist suggests is not only about financial problems but operational efficiency. He is therefore calling on the Ministry of Finance to as part of policy measures prioritise enhancing the productivity and operational efficiency of the SMEs.
Such measures Prof. Aryeetey believes will ensure the transition of these small and micro businesses into large corporations which will drive the expected economic growth and development.
He said, “As a result of these challenges that they face, they are unable to make the transitions that will propel the growth that we are looking for. Those transitions are what will enhance productivity. And it is for the productivity that the economy will grow. It is not the number of SMEs that you have, but it is how productive they are that will help you drive growth in a sustainable manner.”
Prof. Aryeetey is calling on the government to go back in time and learn from the old SME policies and why they failed to be able to come up with strategies which can enhance the transition of the businesses.
