Thesis On Small-Scale Enterprises

Thesis On Small-Scale Enterprises-4
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While it is generally accepted that SMEs are important contributors to the domestic economy, not many governments have framed policies to enhance their contribution or increase their competitiveness (UNCTAD 2005).

Previously insulated from international competition, many SMEs are now faced with greater external competition and the need to expand market share.

The former can be sub-divided into `organised’ and `unorganised’ enterprises.

The organised ones tend to have paid employees with a registered office whereas the unorganised category is mainly made up of artisans who work in open spaces, temporary wooden structures, or at home and employ little or in some cases no salaried workers. Rural enterprises are largely made up of family groups, individual artisans, women engaged in food production from local crops.

Indeed there is preliminary evidence that competence development activities can reduce the failure rates of small firms, which are far more likely to fail than larger firms, particularly in the early years (OECD 2002).

1.2 SMEs in Ghana: Definition and Role towards Economic Development As per statistics from the United Nations Economic Commission for Africa 2010, Ghana’s GDP grew at an annual rate of 5.4 per cent between 20.The authors further point out that SMEs have been recognised as a seed-bed for indigenous entrepreneurship, are labour intensive, employing more labour per unit of capital than large enterprises and promote indigenous technological know-how.Furthermore, due to their regional dispersion and their labour intensity, argument goes that small scale production units can promote a more equitable distribution of income than large firms in Ghana.The major activities within this sector include:- soap and detergents, fabrics, clothing and tailoring, textile and leather, village blacksmiths, tin-smithing, ceramics, timber and mining, bricks and cement, beverages, food processing, bakeries, wood furniture, electronic assembly, agro processing, chemical based products and mechanics (UNECA 2010, Kayanula and Quartey 2000).Among their many roles, SMEs in Ghana have been crucial in mobilising funds which otherwise would have been idle (Kayanula and Quartey 2000).Limited access to finance remains a dominant constraint to small scale enterprises in Ghana.Credit constraints pertaining to working capital and raw materials are often cited by small firm and these partly stem from the fact that SMEs have limited access to capital markets, both locally and internationally. SMEs have difficulties in gaining access to appropriate technologies and information on available techniques. This fact is ascertained by UNCTAD 2005 which notes that most SMEs also lack the technical know-how and financial resources needed to acquire state of the art technologies and equipment required to improve productivity and to become internationally competitive. Regulatory Constraints: Although wide ranging structural reforms have improved, prospects for enterprise development remain to be addressed at the firm-level.Such impressive performance was partly contributed to the robust growth of the SME sector in Ghana.Available data from the Registrar General in Ghana indicates that 90% of companies registered are micro, small and medium enterprises (Mensah 2004).Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UK Essays.The dynamic role of Small and Medium scale Enterprises (SMEs) in developing countries towards employment generation and income creation has OVER TIME been highly emphasised by several authors (Kayanula and Quartey 2000, OECD 2004).


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