Ghana’s SMEs are weak and uncompetitive

A Strategic Procurement and Management Chain Consultant has identified lack of technological, financial and managerial capacities by Small and Medium Scale Enterprises in Ghana as the reason why they are weak and uncompetitive to attract good business from the mining and oil and gas sectors to any appreciable level. According to Mr Clifford Adu-Biney, the Procurement Consultant, it is estimated that Ghana’s SMEs constitute 90% of her industrial base, but however faces several challenges including mostly small one man businesses, large informal base, many SME’s not run on sound business principles, and the fear of losing control through good corporate governance structure. Some of the internal challenges of Ghanaian SMEs include, lack of access to finance, lack of entrepreneurial skills, lack of managerial skills and human resources, lack of technical skills and capacity, lack of technological capability; equipment, knowhow and performance monitoring and management systems, lack of formalized operational systems and controls including standards, lack of quality and cost control systems, lack of pre-qualification certifications and lack of adequate operational support systems including HSE and security. The external challenges include unfriendly business environment including SME tax administration, unsupportive government business registration, licensing, regulatory and certification processes, lack of local standards in a number of specialized areas including software engineering development and testing, comatose and reactionary factory inspectorate department, undeveloped and fragmented business development services(BDS) industry, unfriendly financial markets that shy away from medium to long term secured cash flow lending strategies and pays lip service to SME growth and an Insurance Industry that lacks creativity and innovation in long term SME development and growth. Mr Adu-Biney indicated that the way forward could be an integrated approach to capacity building. “Our SMEs cannot help themselves without deliberate interventions. We need to integrate the following purposefully. Policy directives, regulations and local content laws, reforming the business environment to make it SME friendly, public investments in relevant public infrastructure to support business (example power supplies, roads, telecommunications, transportation infrastructure), specific interventions, incentives and policy initiatives including public-private sector partnerships to address external challenges presented in the preceding slide in this presentation, legislation of local participation (Joint Ventures) in all Foreign Direct Investment in the mining and oil and gas sectors,” he noted. He further propose corporate local content policy that drives communication and wide dissemination of business opportunities in a non-discriminatory manner, procurement policies, standards and procedures that are local content friendly, corporate social responsibility activities to support local content development, procurement and contracting, corporate sustainability policies and strategies that creates community ownership and as the IFC puts it the ‘’license to operate’’ syndrome and deliberate SME or supplier development strategies that are focused on specific targets and performance objectives. The institution of a collaborative and consultative strategy to deploy resources, incentives, training and capacity building, business development services(BDS), financing and funding strategies and technical assistance to address the constraints faced by SMEs in the mining, oil and gas industries and to develop their supply and value chains to enhance supply and contracting sustainability. “Without an integrative, collaborative and consultative approach to local content development in the mining and oil and gas sectors driven by committed leadership by government operating through the appropriate policy, legal and regulatory frameworks in a transparent manner, Local Content may remain a pipe dream with insignificant contribution to Ghana’s industrial growth, and 20 years from now we will be asking ourselves where have we come from”, he emphasized.