The challenges of financing small and medium scale enterprises (SMEs) in the Ashanti Region -A Case Study of Stanbic Bank (Gh) Ltd
The main objective of the study is to evaluate the challenges and the extent of financing of SMEs within the Ashanti Region of Ghana, taking cognizance of the role and contributions of Stanbic Bank Ghana Limited. In most jurisdictions, commercial banks as a group are the main source of external finance for SMEs. However, there are number of rigidities of a macroeconomic, institutional and regulatory nature that may bias the entire banking system against lending to SMEs. The statement of the problem is that these commercial banks are most often unwilling to increase loan funding without an increase in the security given thereby leading to stagnation of growth and certain instances unable to expand to enjoy economies of scale necessary to serve their potential of being an engine of national growth and are thus collapsing. The sources of materials for the study were both primary and secondary. Primary data were collected by the use of structured questionnaires which were designed and administered to SME customers and employees of the company alike. Stakeholders like SME customers, management executives and staff of Stanbic Bank were interviewed for input on this study. Secondary materials were extracted from relevant textbooks, newspapers, reports/articles, journals, bulletins and documents presented by corporate financial analysts and policy planners. The study showed that all the staff respondents have been on the SME Banking between the period of less than 2 years and four (4) years; majority having been with the Unit for three (3) years period. In view of the findings, it was recommended that banks should create a separate department for the SMEs; the establishment of a common fund by the government for SMEs; there should be a national policy on SMEs by the government in respect of funding among others in other to educate SMEs in the efficient and effective financial management of their businesses in order to sustain the SMEs to grow into much bigger industries in the near future.
A Thesis submitted to the Institute Of Distance Learning, Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirements for the degree of Commonwealth Executive Masters of Business Administration, April, 2012