One-fifth of MSMEs use the formal justice system in resolving business-related disputes
A study by the Centre for Democratic Development Ghana (CDD-Ghana), has revealed that one-fifth of MSMEs owners or caretakers use the formal justice system to resolve business-related disputes with either customers or creditors who supply the business with inputs, family members, utility companies, MMDAs, employees, business partners and the tax authority – Ghana Revenue Authority (GRA).
Per the findings of the study by CDD-Ghana, lack of trust in the system (87% of owners interviewed); length of time taken by courts to resolve cases (10% of owners interviewed); and the demand for money, gift, or favour by police officers (3% of owners interviewed) before acting on cases are reasons MSMEs owners/caretakers cite for not accessing formal justice service.
For MSME owners who decided to access the formal justice system to resolve business-related disputes, they cited loss of business productive hours (50%), reduction in business operating capital (44%), and damage to business reputation (39%) as the three major impacts of the court cases on their businesses.
According to CDD-Ghana, male-owned MSMEs were found out to have been suffered the negative effects of the court settlement of disputes more than female-owned businesses.
With regards to the payment of taxes, levies and other fees by MSMEs, majority (75%) of MSMEs owners or caretakers are aware of their legal mandate to pay taxes to the tax authority – GRA.
They are also aware of the fact that they are expected by law to submit their annual returns to the Registrar General Department, with 81% of those interviewed reporting that they have submitted their tax returns.
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That notwithstanding, majority (62%) of MSMEs owners or caretakers are unwilling to pay more taxes even if it means more government services, and MSMEs are still equally split in their opinion on the willingness to pay more taxes even if they knew how the government spends tax revenues.
Per the report, significant minorities of MSME owners or caretakers (between 29% and 47%) are largely dissatisfied with the services they receive in return for tax payments and female-owned businesses are more likely than male-owned businesses to be highly dissatisfied with services received in return for paying VAT, income tax, and property rate.
The study by CDD-Ghana adopted both qualitative and quantitative research approaches, the study was conducted with 780 MSMEs in three regions – Greater Accra, Ashanti and Northern – across three geographical zones.
Forty (40) in-depth interviews were conducted with policymakers, policy support/implementing units and service providers between August – October 2020.
According to CDD-Ghana, Micro, Small, and Medium Enterprises (MSMEs) constitute 99.8% of enterprises in the country, account for at least 70% of GDP, and create about 81% of the new jobs.
