Innovative Ways of Gaining Access to Funds for SMEs Setups in Ghana

Abstract

Small and Medium Enterprises contributes to the developments of private sectors, and the sustainable growth of any economy is very crucial. In both developing and developed economies, small and medium enterprises are considered as a backbone for economic growth and development. SME does do not only contribute to the growth of national GDP but also contributes to the reduction of the unemployment rate. In developing economies such as Ghana, SME’s provides 92% of registered companies, providing 85% of manufacturing employment and contributing 70% to the nations GDP. These clearly indicate a significant role SME’s play on the nation’s employment, income, economic growth and development.Despite all these significance, most SME’s in Ghana are challenged with access to finance, in setting up, expanding and sustainability of their businesses. The study found out that; these are commonly due to high interest and collateral rates by most financial institution, documentation requirements by financial institutions, long delay in gaining access to funds by credit institutions, capital cost and also unfavourable terms of credit repayment.  This study, therefore, focused on innovative ways of generating capital for small and medium enterprises from non-financial institutions.The study suggested alternative ways of SME’s gaining access to funds from non-financial institutions to enable SME’s benefit from, investing business smarts, networking opportunities, little or no contractual and collateral strings attached to loans, quick access to credit, and relative patience from investors regardless of their investments.

Keywords: SME’s, Ghana, SME’s and economic development, Financial Institutions.