GEA calls on MSMEs to formalize and attract investors

Mrs Kosi Yankey-Ayeh, the Chief Executive Officer of the Ghana Enterprises Agency (GEA), says there is the need to formalize the Micro Small Medium Enterprises (MSMEs) sector to make the enterprises attractive for investors.                                                                                                          

He said the formalisation of the sector would support the growth and development of their operations and not necessarily for taxation purposes.

She said this would also help them access funding and access markets for their goods and services easily.

Mrs Yankey-Ayeh was speaking at the Information sharing workshop on a baseline study of micro small and medium enterprises (MSMEs) in Ghana in Accra.

In total, 84,592 firms were surveyed and predominantly operating within the: Agro-processing and industrial, handicraft, textiles, and garments sectors.

The study, conducted by the Palladium Group Ghana is to create a comprehensive dataset of all MSMEs (carrying out at least minimal value addition) in Ghana, establish a baseline to inform subsequent periodic data collection of these MSMEs to support the need for evidence-based policy initiatives to this sector.

She said formalisation of the sector was needed if “we are going to address the challenges of accessing finance, because it is important to business linkages.”

She said it was critical for stakeholders to appreciate the role that data played in the development of MSMEs and the national economy.

She said the study also established a baseline to inform subsequent periodic data collection of these MSMEs’ to support the need for evidence-based policy initiatives in the Sector. 

The CEO said the call for the study was timely as GEA aspired to be the data hub of MSMEs in Ghana and they believe that it would trigger many more studies which would help the Government and other MSME development stakeholders to appreciate the challenges confronting the Sector and guide the design of intervention to address them.

She said the baseline was to collect background information that was essential to determine the requirement for a policy intervention for MSMEs both from the technical point of view, and from the MSMEs perspective.  

Mrs Yankey-Aryeh said currently, MSMEs in Ghana contribute significantly to the Ghanaian economy, as they provide the stimulus to economic growth, foster backwards and forward linkages, develop human assets and entrepreneurial skills in the society.

The CEO said despite the contribution of the MSME Sector towards the development of the Ghanaian economy, its growth was contained by a few factors. 

These include the inadequate lack of a comprehensive database on MSMEs, Inadequate access to credit, inadequate access to technology, inadequate access to the market, regulatory and legal constraints.

Others are the uncoordinated efforts of agencies and institutions on MSME Development Institutions, resulting in duplication of efforts.  

She said to achieve a vibrant and sustainable MSME Sector, these issues needed to be addressed.

She emphasised that the Sector had the potential to increase employment and income, as well as reduce poverty in both urban and rural areas.

Mrs Yankey-Ayeh for the sector to thrive, the playing field must be levelled in terms of policies and strategies that would help it achieve its full potential.

Professor Ebo Turkson, the Lead Researcher said Most of the surveyed firms were from the Ashanti Region (23,123, equivalent of 27.3 per cent) and Greater Accra (18,856 equivalent of 22.3 per cent).

He said all 16 regions had a significant proportion of their operating enterprises being informal, with the Western North region recording the least proportion (86 per cent 0 MSMEs being informal firms.

Prof Turkson said the majority of micro (33 per cent), small (35 per cent), and medium-sized (24 per cent) enterprises operated within the handicraft sector, while most large firms were in agro-processing, textile, and garments.

“A significant number (39 per cent) of micro-enterprises sampled were less than 5 years with relatively larger MSMEs surviving longer years or are more mature compared to smaller,” he added.

He said average turnover increases with firm size with small and medium-sized enterprises observed marginal increases in their average turnovers, while the agro-industrial firms reported the highest turnover.