The Development of Small Medium Enterprises and their impact to the Ghanaian Economy

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The Ghanaian economy is made up of very small individual businesses, small and medium scale enterprises (SMEs), corporate bodies and multinational companies. They together form the medium through which the economy transacts business activity and grows. The government agenda to make the private sector the engine of growth is mainly driven by the SME sector. The SME sector contributes over 70% of the country’s GDP according to Villars (2004). SMEs have over the years been very significant to the economic development of most developing countries, especially Ghana. It is a major form of business and a major employer making strong positive impact on the economic growth and GDP in Ghana This study researches into the operation of the SME development in Ghana, the importance of the SME to the Ghanaian economy, the challenges facing the sector and makes recommendations as to how to resolving these challenges and the impact to the Ghanaian economy Data was collected from SMEs from various cross sections of manufacturing, trade, commerce and service industries. The data was collected through interviews, questionnaires, publications and reports On the average the sector was found to be a major contributor to the GDP, performing very well. Some of the problems faced by the sector were lack of access to credit facility, inefficiencies with their management, inability to capitalize on advanced technology, regulatory and legal constraints. Recommendations are made for the training of the SME owners and managers as well as for the proper registration and structuring of the SME ventures to facilitate access to credit and also meet regulatory requirements.
A thesis submitted to the Institute of Distance Learning, Kwame Nkrumah University of Science and Technology in partial fulfilment of the requirement for the degree of MASTERS IN BUSINESS ADMINISTRATION Commonwealth Executive Masters in Business Administration, Institute of Distance Learning