Assessing the effects of macro policies on small and medium enterprise development; a case study of Awutu-Effutu-Senya District

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The development of SMEs has emerged as one of the strategies for poverty reduction in sub-Saharan Africa. In Ghana, it has long been recognized that Small and Medium Scale Enterprises (SMEs) play a dynamic role towards achieving the growth objectives. It is widely recognized that a conducive and enabling policy and regulatory environment is very crucial to the development of small and medium enterprises (SMEs). The macro policies that are operating may either promote SME development or may hinder their development because they may be biased against them. The policies influence the demand for the products and services of SMEs, as such can either facilitate or deny access to the markets that are so essential for SME creation and growth. The positive effects of macro policies on the private sector and SMEs in particular could take several forms ranging from strengthening their capacity by way of improvement in the policy environment within which they operate and or removal of policy and regulatory constraints that hinder the growth as well as ensure an improvement of access to information on markets for produce and services of SMEs, improve the infrastructural base, improve access to information on technologies and production techniques and systems, provide financial services and train in business management among others. The need to carry an assessment of the effects of macro policies on SME development therefore hinges on this premise. The broad objective of the study was to assess the effects macro policies are having on SME development. As a kind of impact assessment, the effects of the policies are assessed based on how they performed against the markets for the products and services of SMEs, the access to, availability and prices of the inputs needed by SMEs and the ease of starting a and doing business. It believed that these determine the profit level, cost of operating, degree of expansion and the extent to which jobs can be created by SMEs. Five macro policies namely; Fiscal, Monetary, Trade, Regulatory, and Education policies which very much influence the activities of SMEs have been studied. The main effects looked at is at three levels that is, the enterprise, entrepreneur and operational environment level. Indicators were used to measure the effects at each of the levels. Data regarding these aspects of the study was collected from primary and secondary sources. Stratified sampling was applied to come up with the study sample. Simple statistical tools of data analysis were employed such as tables, charts and percentages. The chi square was also applied to test the hypothesis stated. The study found out that there have been different level of effects of macro policies on the development of SMEs, that is most of the macro policies are not promoting SME development. For instance the, Fiscal, Trade and Monetary as well as Regulatory Policies which were supposed to promote SME development rather have done very little in that regard towards the sectors development. Those enterprises for example that are in the poultry sector have virtually collapsed as a result of the operation of the Trade policy. It is only educational policy that has a significant positive effect on the development of the sector. It should however be noted that the effects of the policies on the various activities of the SMEs vary in degrees with some demonstrating less severe effects on the indicators of the SMEs than others. To a large extent it will not be an over exaggeration to state that the development of SMEs as a result of macro policies have been generally minimal due to a number of constrains in the framework within which the policies operate with regards to their operation towards SMEs. A number of recommendations were proposed for addressing the pertinent issues arising from the study findings. These recommendations involve putting in place strategies that would facilitate the activities of the private sector of the country which will then manifest at the district to engender desirable changes at the enterprise, entrepreneur and operational environment levels of SMEs. It also concerns strategies that will go a long way to strengthen the existing support institutions of SMEs in the country. In order to realize the objective of SME development, it is recommended that all the institutions concerned with policy affecting SMEs in any way must ensure that there is maximum collaboration and proper coordination and implementation of the suggestion recommended so as to reduce duplication and impediments that arise when sector specific policies are implemented.
A Thesis submitted to School of Graduate Studies Kwame Nkrumah University of Science and Technology, Kumasi in partial fulfillment of the requirement for the award of Masters of Science Degree in Development Planning and Management, 2005