..Improving operations of SMEs

Page 28
August 18, 2008

THE Government of Ghana is collaborating with the Republic of Korea for the development of a vibrant and efficient small and medium-scale enterprises (SMEs).
The two countries have, therefore, begun the process of discussing and sharing ideas on how to improve Ghanaian SMEs.
Presenting a document on “Building the Foundation for the Development of SMEs in Ghana” during a courtesy call on Mr Kwaku Agyeman-Manu, a deputy Minister of Trade and President’s Initiative, the President of the Korean Institute for Development Strategy, Dr Seung-Hun Chun, said Ghana needed a comprehensive framework of SME support strategy to build the foundation for the development of SMEs in the country.
He said the country needed to focus on a number of target industries, based on her resource endowment as well as on her internal and external factors, and stressed the need for the country to build a strong industrial base.
He called for the promotion of SMEs, since they were critical for the creation of jobs, stimulation of innovation, entrepreneurship and promotion of local economies.
“Development of sound industrial base is vital for resolving the chronic trade deficit problem as well as for achieving the middle-income country target,” he said, adding that “after a long history of economic stagnation, Ghana faces a momentum for development and prosperity”.
Dr Chun, who outlined a number of recommendations for the development of the SME sector, said the registration, operation and closure of business in the country had inherent weaknesses, and called for an update and revision of the Companies Code of 1963.
He stressed the need for the exemption of SMEs from employment regulation, since SMEs capacity to account for rigid and harsh employment practices fell short.
He said land acquisition or registration for industrial purposes was a tedious exercise, and called on the government to acquire land from landowners and lease such land to potential investors at market rates.
Mr Chun said the rental income should be paid as a compensation to the landowners.
“The Government of Ghana should facilitate an arrangement where landowners can participate in economic projects as financial partners,” he said, saying that the government should also implement the Land Administration Programme as soon as possible.
The burden of tax, he said, fell unequally on SMEs, and called for a reduction of the tax burden on them.
Dr Chun said the government should develop a national policy framework for SMEs, adding that it should “devise and set up SMEs criteria so that its support would be concentrated and distributed appropriately and effectively”.
Among other things, he called for the establishment of SME bank with credit guarantee for SMEs to enable them have access to funds for development.
For his part, Mr Agyeman-Manu said the meeting with the Korean delegation was an opportunity for Ghana to learn from the Korean experiences.
He believed the interaction with the Korean delegation would go a long way to help develop a vibrant SME sector, and the gratitude of the government to the Korean government.