The Contributions of Small and Medium Scale Enterprises to Economic Growth: A Cross-Sectional study of Zebilla in the Bawku West District of Northern Ghana.

Abstract

The mainstay of developing economies is the informal sector. In Ghana, most employment opportunities are largely hinged on the private sector. The contribution of this sector to Ghana’s economic growth through job creation cannot be underestimated. Globally, SMEs are noted for empowering citizens and economic growth of countries in Asia, Europe and North America. Though successive Ghanaian governments after independence in 1957 have made strenuous efforts towards reducing poverty and accelerating economic growth through formulating policies that favor SMEs, there is still a lag in knowledge regarding the presence of SMEs and level of development in rural settings in Northern Ghana.  The study sought to find out if the presence of SMEs could be linked to rapid infrastructural development, whether significant number of people is gainfully employed in the sector, and if SMEs have attracted the needed financial institutions through increased in credit facilities. By extension we also explored inherent challenges confronting SMEs and provided recommendations for entrepreneurs and policy makers to improve the sector in Ghana.

The study employed a descriptive cross-sectional study design and data was collected between April and August, 2013. Simple random sampling was used to select One hundred and sixty (160) SMEs respondents at 92% confidence interval (C.I) at 0.08 error margin. To achieve the set objective, the study employed both primary (questionnaires and observation) and secondary (documented evidence, internets materials etc) data collection techniques. The study revealed that SMEs do not play significant role in employing youth in the District though most SMEs rely on free family labour to minimize cost. Some infrastructural development like roads constructions could not be associated with the presence of SMEs. 15% of respondents attributed SMEs presence to housing and electricity extension to selected areas. Onion cultivation dominated other crops production in the area and generated appreciable profits. Limited access to credit, Infrastructural development deficits such as decent roads, Onions storage facilities and irrigation dams for all year round cultivation were among key challenges outline as hindering SMEs development in the area.  It is recommended that, entrepreneurs should be encouraged to form cooperatives to enable them access bank credits since most financial institutions hold the view that, group lending minimizes the risk of loan default. Also, occasional capacity training sessions should be organized for SMEs on basic records keeping and entrepreneurial management skills.

Keywords: SMEs contribution, Onion cultivation, Dawadawa / Shea butter extraction, Zebilla, Bawku.