Accessing finance among women-owned small businesses: evidence from lower Manya Krobo municipality, Ghana

Simon Boateng,Kwabena Osei Poku

doi:10.1186/s40497-018-0128-0

Simon Boateng, Kwabena Osei Poku

Open Access

https://doi.org/10.1186/s40497-018-0128-0

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Abstract

The study examined the constraints to accessing finance among women-owned small businesses in the Lower Manya Krobo Municipality in the Eastern Region, Ghana. We employed largely qualitative methods using the case study approach. The purposive and simple random sampling techniques were used to select 50 respondents. In-depth interview guide and focused group discussion were used to gather data from participants. The data were thematically analysed. The study revealed that there are constraints of poor market demand and lack of capital and credit. In furtherance, although collaterals exist for small businesses, they are being discriminated against women micro-entrepreneurs due to the patrilineal inheritance system of the area. Again, it was found that the financial institutions generally considered giving loans as risky as a result of lack of codified business strategy and plan, proper costing of business and informational asymmetries about business owners and their businesses. The study, therefore, recommends that the activities of women micro businesses in the private sector of the economy should be urgently recognised within the lending models and structures as they constitute a valuable area of economic growth. The National Board for Small Scale Industries (NBSSI) through the Business Advisory Centre (BAC) should organise educational and training seminars regularly to educate women micro-entrepreneurs on business management to be able to negotiate effectively on the various landed properties in such a patriarchal system to reduce high start-up mortality of women micro businesses. The study further recommends to the National Identification Authority to take cogent action to fast-track the identification system of citizens as it remains one of the major factors to reduce loan risks and interest rates.

Highlights

Accessing finance has been proven to be the major constraint facing small and medium scale enterprises (SMEs) worldwide (Ghosh et al 2017; Bamfo and Asiedu-Appiah 2012; Lader 1996)
Exact questions included the views about the binding constraints faced by women-owned small businesses, how government programmes facilitate the growth of such small businesses and risk management strategies that women micro-entrepreneurs adopt in their operations in the Lower Manya Krobo Municipality (LMKM) in Ghana
Implications The study examined the constraints to accessing finance among women-owned small businesses in the Lower Manya Krobo District in Eastern Region, Ghana

Summary

Introduction

Accessing finance has been proven to be the major constraint facing small and medium scale enterprises (SMEs) worldwide (Ghosh et al 2017; Bamfo and Asiedu-Appiah 2012; Lader 1996). In many developing countries, women constitute more than half of the population owning small businesses (Winn 2005; Fuller-Love et al 2006; Tambunan 2008) This situation is not different from Ghana, as small businesses contribute immensely to the national economy through provision of employment, income and wealth creation (Ahiawodzi and Adade 2012; Peprah 2012). It is estimated that about 80% of small businesses in Ghana operate in the informal sector (Biekpe 2004); and many of these small businesses are managed and owned by women (Peprah 2012) This is because women in Ghana constitute over 50% of the population, and over 60% of those are with little or no education of whom 55% of those are living in poverty (GSS, 2008; GSS 2011; Peprah 2012). The Global Entrepreneurship Monitor (GEM) (2010) and Kelley et al (2011), report that increasing the number of women micro-entrepreneurs involved in starting new businesses and expanding the businesses of existing ones is critical to a country’s long-term economic growth

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