Browsing by Author "Musah, Godwin"

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    The SME financing gap in GHANA: multi sectoral evidence
    (August, 2015) Musah, Godwin
    SMEs are very instrumental in fueling economic development globally. Regardless of this their important role, several factors militate against them of which lack of access to credit is one of the greatest. The study investigated into the SME financing gap in Ghana on a sectoral basis. Data for the study was obtained through a survey of SMEs in Kumasi and Techiman. A total of 1200 SMEs were sampled with 200 each from Agriculture, Manufacturing, Retail, Transport, Construction and Hospitality. After applying parametric and non-parametric methods in the analyses of data, it was revealed that there are sectoral differences in SMEs credit constraints with the Agriculture sector being the most credit constrained whilst the Hospitality sector was the least constrained. Results of the study also showed that gender, marital status, ownership status, the sector in which the SME operates as well as the size of the business are significant determinants of credit constraints. It also came to light that the number of dependents, sector, location and number of assets that an SME has are significant determinants of being completely rejected by formal lenders whilst capital requirements and ownership status of the business determine the likelihood of having less than 40% of loan amount applied for. Furthermore, marital status, religion, sector, age of business are significant determinants of being rationed to 40- 59% of loan amounts applied for and the length of relationship the SME has had with the formal lender being a significant determinant of having 60-79% of loan amounts applied for. Finally, marital status again is a significant determinant of having 80 – 99% of loan amounts applied. Priority sector lending, credit guarantee programmes and group based lending amongst others are therefore recommended.