Non-existent R&D investment/ Product Innovation.
Innovations are among the most important means through which small and medium sized enterprises contribute to increased employment and economic growth.
A quick glance of SMEs in Ghana will reveal a good number of them engaging in very little or no research. This is evidenced from the fact that most of the SMEs even do not have an R&D section in their organizational structure. This could be explained by the capital intensiveness of R&D, laxed patent laws, the inadequacy of government support and lack of managerial capacity.
As a solution, SMEs should be given the necessary support and incentives to motivate them to undertake product innovations to make them more competitive. This could be done in the form of grant assistance or through taxation. Although Section 19(1) of the internal Revenue Act, Act 592(as amended) provides for 100% deduction of R&D expenditure which is quite good.
However a lot more could be done in this area by taking lessons from emerging economies like India and South Africa (both countries grant 150percent deduction) so that such businesses would have added motivation to engage in research and development. Grants could also be given to SMEs in certain key sectors of the economy to reduce the financial burden that comes with research and innovativeness. Once this is done, it will go a long way to make the SMEs more competitive.
Lack of entrepreneurial knowledge
Apart from the lack of capital being a hindrance to the growth of SMEs, the lack of entrepreneurial knowledge is also another major challenge facing SMEs. In Ghana most business owners have the unfortunate culture of merging family and business. They tend to include the household and personal expenditures with the operational expenditures of the business.
Another worrying trend among small business owners is the failure on the part of the owners to seek professional advice on technical challenges but rather tend to take these decisions themselves.
Empowering small business owners is essential for achieving the goals of sustainable development. The government should through NBSSI provide adequate training programs; information dissemination; mentoring trade fairs and exhibitions can be important sources of entrepreneurial development.
Vehicle for economic self-sufficiency.
The role of SMEs as a vehicle for economic self-sufficiency cannot be over-emphasized. They play an enormous role in terms of employment creation, provision of goods and services at affordable costs and sustainable development as a whole as it is in other countries. According to Capacity Development Centre Ghana, 85percent of employment in Ghana is generated by SMEs and contribute about 70percent of the nation’s GDP.
In India, SMEs contribute nearly 45percent share of manufactured products, 40percent of overall export of the country and employment to over 32milliion people. In South Africa, SMEs contribute 30percent to GDP, 70-80percent in employment. SMEs have been the engine of Europe’s economy during the period of the Eurozone crises accounting for 80percent of the European jobs in the last 5 years.
This goes to prove that for Ghana to attain economic self-sufficiency it desperately seeks then SMEs must be the focal point of major government policies to develop the economy. The high rate of unemployment in the country coupled with the relatively lower standards of living can be reduced if SMEs are given the necessary support to expand and overcome the numerous challenges that they face. This in my opinion will go a long way to accelerate our vision of attaining economic self-sufficiency.
In conclusion, the limited capacity of the SMEs to effectively meet the production needs of the country has inevitably resulted in over-reliance on import for daily needs. Removing these bottlenecks will make SMEs more competitive and efficient in playing a pivotal role in promoting grassroots economic growth and equitable sustainable development.
There must deliberate government policies to nurture and transform SMEs as agents of economic growth and employment creation. Ghana is blessed with so many resources so if there are deliberate policies and support by government to support SMEs to effectively create and add value to the existing resource then the objectives of the nation to become a self-sufficient economy could be achieved.
The benefit of an effective SME sector will affect every aspect of the economy be it employment creation, improvement in standards of living, infrastructural development and favourable macro-economic indicators. This therefore means that the government and all other stakeholders must make it their primary focus to remove those bottlenecks to ensure that this nation makes the needed progress because without an effective and efficient SME sector then the nation cannot make the needed progress.
