Exploring the Factors That Hinder the Growth and Survival of Small Businesses in Ghana (A Case Study of Small Businesses within Kumasi Metropolitan Area)

Anthony Kusi,Christian Narh Opata,Tettey-Wayo John Narh

doi:10.4236/ajibm.2015.511070

Anthony Kusi, Christian Narh Opata + Show 1 more

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https://doi.org/10.4236/ajibm.2015.511070

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Abstract

Micro, Small and Medium Scale Enterprises (MSMEs) contribute immensely to job creation, income generation and poverty reduction in emerging economies like that of Ghana. These positive contributions notwithstanding, most MSMEs in these economies have been performing poorly. This study therefore seeks to identify and analyze the challenges faced by MSMEs and proposed by appropriate measures that will enhance and sustain the vibrancy of MSMEs in order for them to perform their expected roles in the economic development process of Ghana. To be able to delve into the challenges of MSMEs in Ghana, a conceptual and theoretical framework is designed to guide the preparation of data collection instruments to suit the study. This involves a combination of survey and case study methods of data collection and analysis. The present study reveals that MSMEs are dominated by youth and female operators usually with low level of education. A further revelation is that majority of MSMEs lack qualified personnel; have poor access to credit and are usually self-financed. Based on the above, the study recommends the establishment of a common board to oversee the activities of support institutions for MSMEs. The study again proposes for the creation of MSMEs fund at all district, municipal and metropolitan areas to support MSMEs activities. Furthermore, the study is proposed for Bank of Ghana to create MSMEs bank to provide funds specifically for MSMEs development. Finally, effective implementation of the recommendation can lead to growth of MSME’s sector in Kumasi metropolis and eventually results in creation of employment as well as poverty reduction.

Highlights

The role of MSMEs relative to innovation and the promotion of industrial development, job creation and market competitiveness, has been recognized by both academics and policy makers F([1] Beck et al, 2005; [2] Thurik and Wennekers, 2004; [3] Ayagari et al, 2003; Davidson and Henderson, 2002; [4] Storey, 1994).Governments of both developed and developing economies attach great importance of MSMEs to their economies
Aryeetey et al (1994) [36] reported that 38% of the micro-small businesses surveyed mentioned credit as a constraint, in the case of Malawi, it accounted for 17.5% of the total sample [21] (Daniels and Ngwira, 1993: 30-31)
This exploratory study examined the reasons for small-business failure in Ghana and to be precise Kumasi Metropolis

Summary

Introduction

The role of MSMEs relative to innovation and the promotion of industrial development, job creation and market competitiveness, has been recognized by both academics and policy makers F([1] Beck et al, 2005; [2] Thurik and Wennekers, 2004; [3] Ayagari et al, 2003; Davidson and Henderson, 2002; [4] Storey, 1994). Governments of both developed and developing economies attach great importance of MSMEs to their economies. In Africa, the potential role that small businesses can play in terms of poverty reduction, job creation, and fostering entrepreneurship is unprecedented

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