Incorporating SMEs Into Value Chain Can Boost Ghana’s Dev’t

GWES 2018 launch in Accra

Accra, May 13, 2018//-Small and Medium Enterprises (SMEs) contribute significantly to income and job creation in Ghana. They contribute about 80% of the larger industrial sector and employed about 70% of the country’s labour force, are still the fulcrum of the Ghanaian economy.

In many developing countries, SMEs provide 60-70% of formal employment. In sub-Saharan Africa alone, that figure rises to 80%.

The scale and diversity of small business in the Ghanaian economy makes it a potentially powerful force in development efforts.

To harness this potential, it is important to strengthen the competitiveness of SMEs and enhance their contribution to the 2030 Agenda for Sustainable Development Goals (SDGs), the 15-year global roadmap adopted by the international community in 2015, according to experts.

However, the Director of Entrepreneurship Development Department of the NBSSI, Mrs. Anna Himbson, noted that players in the SMEs sector could not compete with large enterprises for advertising space and appealed to media owners to come to the aid of the SMEs in this regard.

According to her, SMEs were still invisible in Ghanaian media in terms of advertisements.

Buttressing the sentiments expressed by Mrs. Himbson, the Director of Women’s Entrepreneurship Development of the NBSSI, Ms. Habiba Sumani, added that some SMEs have come with wonderful products and services but because of small budget they could not promote them well in the media for the public to purchase them.

She used the occasion to appeal to journalists to follow-up on key policies targeting private sector development.

This, Ms Sumani, who was one of the facilitators of the workshop, believes will help speed up the implementation of the policies for the betterment of the private sector and the country at large.

Despite the numerous challenges, including lack of managerial skills, inadequate finance and poor record keeping, she was confident that the Micro, Small and Medium Enterprises (MSMEs) could do well in a favourable business environment.

Ms Asumani added: “MSMEs can realize their full potential to promote economic development if they were to have access to: markets, finance, technology, and business skills.

These can only be achieved through entrepreneurship innovation and government intervention”, she stated.

Promoting SMEs

To this end, Ghana’s National Board for Small Scale Industries (NBSSI), a non-profit public sector organisation under the Ministry of Trade & Industry launched its maiden Ghana Women Entrepreneurship Summit (GWES-2018), with a call on the private sector players to double their support for women entrepreneurs.

Speaking at the launch in Accra recently, the Executive Director of the NBSSI, Ms. Kosi Yankey said: “This exciting initiative will create a unique platform for women entrepreneurs that are game-makers and innovators to engage in powerful and thought-provoking conversations, focused on the challenges women face while doing business in Ghana”.

She added that the summit which is expected to take place from 4th to 5th June 2018 aims at finding innovative ways of accelerating the pace of women entrepreneurs, among others.

NBSSI will host the GWES 2018 bringing key stakeholders and international partners together to define actions in the public and private sector to create an enabling environment for women owned businesses, highlight effective approaches taken across the world to resolve constraints and challenges, and to spearhead partnerships to accelerate growth and strengthen WBEs contribution to the economy, Ms Yankey emphasised.

She observed: “As the apex governmental body for the promotion and development of the micro, small and medium enterprises (MSMEs), the NBSSI established the Women Entrepreneurship Development Department (WEDD) with the aim to promote and develop women entrepreneurs in Ghana”.

The long-term goal is for MSMEs to maximize their contribution to the country’s economic and social development with respect to production, income distribution and employment and the closer integration of women and people in rural areas into the national economy, Ms Yankey.

 Ms Habiba Sumani said: “The two-day summit will bring together leaders from the government, regulatory bodies, research and academic institutions, development partners, Non-governmental Organizations, women entrepreneurs, and prospective entrepreneurs, Civil Society and the Media to find effective ways to resolve challenges and systemic constraints that prevent women’s full and equal participation, in Ghana’s economy.

 Madam Sumani added that the summit would also strengthen the contribution of women in Ghana’s economy, assess the progress to date in economic empowerment of women, build sustainable networks to bring resources to women entrepreneurs, advocate for change against negative social norms that impede the progress of women, and open a new path using technology to ensure their advancement and economic liberalization.

“We are also going to use the summit to tap into the entrepreneurial skills and potential of the women entrepreneurs in the country”.

The ultimate objective of the GWES, according to her is to craft Ghana’s Call to Action on innovative ways to harness the untapped potential of women entrepreneurs contributing to job creation and economic growth.

While the specific objectives of the summit are to: develop joint gender biased public policy proposals to Government of Ghana to advance women business enterprises (WBEs); create an enabling business environment focused on empowering women business organisations to increase incomes and create jobs; demonstrate the use of technology to innovate, grow and enhance business operations; and provide a platform to share success stories and experiences, best practices and to formulate strategies to resolve challenges that face women entrepreneurs in Ghana.

Focus Group consultations will be held to clearly articulate constraints, challenges and opportunities for relevant sectors where WBEs operate across Ghana.

Targeted sectors will include: agriculture & Food Processing; technology; service industries; creative Industries; manufacturing; extractive Industries; and informal commercial traders

These sessions, according to the organisers would focus on priority issues negatively impacting WBEs in target sectors; targets of opportunity to strengthen WBEs (Training/Pitching etc.); and outline actions for the Summit.

The summit will be organized around a series of panel talks, seminars and technical working sessions tackling the constraints facing women owned business in various supply chains and approaches that have successfully impacted women entrepreneurs.

The sessions will also review best practice approaches taken by local and international partners, which serve to inform new approaches for replication in Ghana. In addition, an exhibition area will allow for women business to showcase their products.

Some of the topics to be discussed at the summit include: trade Policies required to enable and enhance the business environment; training on Business Development Services; capacity building to introduce new business tools and systems; marketing &branding; access to finance; access to markets to broaden the customer base; and business networking organisations.

Furthermore, the summit also aims to mobilise resources and create partnerships to accelerate the promotion, growth and development of women entrepreneurs in the West African second largest economy.

The success of this initiative requires a shared commitment and partnership of key stakeholders. To this end, the NBSSI executive director and her team are positioned to work with stakeholders in the public and private sector to address a number of these drivers to lead and effect change, by implementing the right policies to promote the inclusive growth and women’s economic empowerment and by improving public sector practices in employment and procurement.

Addis Ababa Action Agenda

The Addis Ababa Action Agenda on financing for development lays out financing priorities for the 17 Sustainable Development Goals (SDGs) that form the core of the 2030 Agenda. The SDGs call for multiple interventions to build strong SMEs, notably in the areas of access to finance and skills; knowledge and technology transfer; and by creating linkages with regional and global value chains.

So incorporating SMEs into global or regional value chains can be a potent way to strengthen small business operators through their participation in the global economy.

Global value chains make up 84 % of the international production networks of multinational enterprises (MNEs), meaning they have become the engine room of the global economy.

United Nations Conference on Trade and Development (UNCTAD) data revealed that some 90,000 multinational enterprises (MNEs) together have US$27 trillion in foreign direct investment stock invested in nearly 1 million foreign affiliates worldwide.

Together, MNEs account for over a quarter of global GDP and 30% of private sector value-added. Their production networks form the backbone of trade, now accounting for 80% of all cross-border sales.

In contrast with the international reach inferred by their name, most global value chains have a distinctly regional character. Therefore, strategies to tap the potential of value chains for economic development would do well to heed a regional approach.

There is a large potential for business linkages in both manufacturing and services industries. This can include connecting local firms to value chains by linking them to leading firms and affiliates operating in their countries.

These links could potentially achieve the benefits for small enterprises that the Addis Ababa Action Agenda calls for. Such connections help to create stable offset points for the goods and services produced by small suppliers, offer contact with technological innovation, and smooth access to new skills and alternative sources of capital.

However, value chain participation can hold risks. Economic dependence and power imbalance sometimes characterize these networks, and SMEs linked to value chains are not spared the demand fluctuations associated with certain sectors.

Value chain participation is not a panacea for all small operators. Smaller domestic firms naturally have fewer opportunities to become part of production networks because of limited resources and bargaining power, as well as information asymmetries.

Country strategies to incorporate into value chains are intricate and cut across different policy areas. A value chain participation plan for SMEs must form part of a broader national strategy. Many of the factors that underpin links with cross-border production networks are overarching, affecting firms regardless of their size.

A fundamental requirement for effective value chain integration is adequate infrastructure. Another is policies geared towards creating a sound overall business environment. These include coherent trade, investment, tax and competition policies, labour market regulation, intellectual property rights, access to land, among others. Moreover, trade and investment facilitation efforts are also needed to help make a sound business environment a reality.

Beyond these basic requirements, a focus on the following areas can help Ghanaian SMEs embark on the global and regional value chain development path including: enterprise clustering; linkages development; science and technology support and an effective intellectual property rights (IP rights) framework; business development services; entrepreneurship promotion; access to finance for SMEs; and digital access.

The incorporation of SMEs into regional and global value chains can be a powerful driver of structural transformation and finance for developing countries. But this integration won’t happen automatically, or in a vacuum.

Policy makers and the international community therefore need to work closely with small business to help SMEs reach their potential as engines of the global economy, according to industry experts.

By Masahudu Ankiilu Kunateh, African Eye Report



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