Ghana’s SMEs grappling with severe capital deficit; secures only $25m out of $6bn needed capital support
Ghana’s vibrant small and medium-sized enterprises (SMEs) sector finds itself at a crossroads as it grapples with a formidable obstacle: a gaping capital deficit. According to Charles Abani, the United Nations (UN) Resident Coordinator in Ghana, these vital engines of economic growth secure a meager 0.41 percent of the capital they desperately require to foster expansion.
The predicament deepens when one scrutinizes the sources of SME financing within the nation. Private equity and venture capital (PEVC) channels, which are indispensable conduits for SME growth, muster a mere estimated US$25 million annually. This pales in comparison to the staggering US$6.1 billion financing chasm that Ghana’s SMEs must bridge to realize their true potential.
Mr. Abani underscores the imperative for decisive action to procure patient capital, nurturing the private sector’s latent prowess. SMEs in Ghana, though potent revenue generators and profit centers, remain fettered by an insurmountable financial gulf, thwarting their full potential and hindering progress towards economic development and enhanced living standards.
In a Ghanaian context, the significance of SMEs cannot be overstated. These enterprises comprise an estimated 90 percent of businesses in sub-Saharan Africa (SSA), employing a substantial 80 percent of the workforce and contributing a remarkable 70 percent to the nation’s gross domestic product (GDP). Strikingly, nearly half of these ventures, constituting 46 percent, are women-led, further underscoring their pivotal role in fostering gender-inclusive economic growth.
The Sustainable Development Goals (SDGs) loom large on the global development agenda, with the 2030 deadline fast approaching. However, the latest SDG Progress Report paints a bleak picture: over 30 percent of these critical goals have either stagnated or regressed. Amid this sobering backdrop, the UN office in Ghana seeks to forge extensive partnerships, bolster private sector support, and mobilize additional capital, all integral to breathing life into the 2030 agenda.
Through its Sustainable Development Cooperation Framework (2023-2025) with the Ghanaian government, the UN endeavors to address cross-cutting challenges such as financing for the SDGs, climate change, digitalization, and urbanization. A central tenet of this mission is the assurance that no one, especially women, children, young people, and persons with disabilities, is left behind in the pursuit of inclusive economic transformation, equitable access to services, and lasting peace.
The blueprint for unlocking the boundless potential of Ghana’s SMEs and their pivotal role in fulfilling the SDGs hinges on a multifaceted approach. Providing SMEs with the requisite tools, resources, and an enabling environment tops the list. Fostering innovative ecosystems where creativity thrives is equally paramount, as is nurturing strategic partnerships between governments, academia, and the private sector to fuel technological advancement and ingenious solutions.
The report’s recommendations include robust capacity-building initiatives, pragmatic steps to facilitate SMEs’ access to affordable credit, and enhanced coordination of SME programs to amplify investment volume and consolidate technical assistance endeavors.
As the world strives to surmount multifarious challenges en route to the 2030 agenda, Ghana’s SMEs stand as linchpins of progress. The UN and its partners call for resolute action to unshackle these dynamic enterprises, enabling them to drive sustainable development and breathe life into the ambitious SDGs.
