AJIBM  Vol.5 No.11 , November 2015
Exploring the Factors That Hinder the Growth and Survival of Small Businesses in Ghana (A Case Study of Small Businesses within Kumasi Metropolitan Area)
Abstract: Micro, Small and Medium Scale Enterprises (MSMEs) contribute immensely to job creation, income generation and poverty reduction in emerging economies like that of Ghana. These positive contributions notwithstanding, most MSMEs in these economies have been performing poorly. This study therefore seeks to identify and analyze the challenges faced by MSMEs and proposed by appropriate measures that will enhance and sustain the vibrancy of MSMEs in order for them to perform their expected roles in the economic development process of Ghana. To be able to delve into the challenges of MSMEs in Ghana, a conceptual and theoretical framework is designed to guide the preparation of data collection instruments to suit the study. This involves a combination of survey and case study methods of data collection and analysis. The present study reveals that MSMEs are dominated by youth and female operators usually with low level of education. A further revelation is that majority of MSMEs lack qualified personnel; have poor access to credit and are usually self-financed. Based on the above, the study recommends the establishment of a common board to oversee the activities of support institutions for MSMEs. The study again proposes for the creation of MSMEs fund at all district, municipal and metropolitan areas to support MSMEs activities. Furthermore, the study is proposed for Bank of Ghana to create MSMEs bank to provide funds specifically for MSMEs development. Finally, effective implementation of the recommendation can lead to growth of MSME’s sector in Kumasi metropolis and eventually results in creation of employment as well as poverty reduction.
Cite this paper: Kusi, A. , Narh Opata, C. and John Narh, T. (2015) Exploring the Factors That Hinder the Growth and Survival of Small Businesses in Ghana (A Case Study of Small Businesses within Kumasi Metropolitan Area). American Journal of Industrial and Business Management, 5, 705-723. doi: 10.4236/ajibm.2015.511070.

[1]   Thorsten, B., Demirguc-Kunt, A. and Levine, R. (2005) SMEs, Growth, and Poverty: Cross-Country Evidence. Journal of Economic Growth, 10, 199-229.

[2]   Thurik, R. and Wennekers, S. (2004) Entrepreneurship, Small Business and Economic Growth. Journal of Small Business and Enterprise Development, 11, 140-149.

[3]   Ayyagari, M., Beck, T. and Demirgüç-Kunt, A. (2003) Small and Medium Enterprises across the Globe: A New Database. Vol. 3127, World Bank Publications.

[4]   Storey, D.J., Understanding the Small Business Sector (1994) University of Illinois at Urbana-Champaign’s Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship.

[5]   Audretsch, D. and Thurik, R. (2004) A Model of the Entrepreneurial Economy. International Journal of Entrepreneurship Education, 2, 143-166.

[6]   Simon, J., Boone, P., Breach, A. and Friedman, E. (2000) Corporate Governance in the Asian Financial Crisis. Journal of Financial Economics, 58, 141-186.

[7]   Donald, G. and Tage, P. (2005) Growth and Profit-Oriented Entrepreneurship among Family Business Owners in the Tourism and Hospitality Industry. International Journal of Hospitality Management, 24, 219-242.

[8]   Kantis, H., Angelli, P. and Koenig, V.M. (2004) Desarrollo emprendedor—America Latina y la experiencia internacional. Inter-American Development Bank, Washington DC.

[9]   Timmons, J.A. (2004) New venture Creation: Entrepreneurship for the 21st Century.

[10]   Daniel, A. (2015) MSME Activities. Income Levels and Poverty Reduction

[11]   Muzondi, L. (2014) Women’s Small-Medium and Micro Enterprises as Engines for Income-Poverty Alleviation: A Renewed Approach to Tackling Urban Poverty in South Africa. Mediterranean Journal of Social Sciences, 5, 632-638.

[12]   Mnenwa, R. and Maliti, E. (2009) Assessing the Institutional Framework for Promoting the Growth of SMEs in Tanzania. The Case of Dar es Saalam.

[13]   Bolton, J.E. (1971) Report of the Committee of Enquiry into Small Firms. Cmnd 4811, HMSO, London.

[14]   Grindle, et al. (1988) The Dynamics of Micro and Small Scale Industries in Developing Countries. World Development Report, 26, 13.

[15]   Mead, D.C. (1984) Of Contracts and Subcontracts: Small Firms in Vertical Disintegrated Production/Distribution Systems in LDCs. World Development, 12, 1095-1106.

[16]   Kayanula, D. and Quartey, P. (2000) The Policy Environment for Promoting Small and Medium-Sized Enterprises in Ghana and Malawi.

[17]   John, B.K. (2009) Assessing Performance of Micro and Small Scale Agribusinesses in Northern Ghana: Non-Financial and Stochastic Frontier Analysis. Master’s Thesis, Kwame Nkrumah University of Science and Technology, Kumasi.

[18]   Nelson, E.R. (1987) Promotion of Small Enterprises. In: Neck, P. and Nelson, E.R., Eds., Small Enterprises Development Policies and Programmes, ILO, Geneva, 8.

[19]   Liedholm, C. and Mead, D. (1987) Small Scale Industries in Developing Countries: Empirical Evidence and Policy Implications. International Development Paper No. 9, Department of Agricultural Economics, Michigan State University, East Lansing.

[20]   Osei, B., Baah-Nuakoh, A., Tutu, K.A. and Sowa, N.K. (1993) Impact of Structural Adjustment on Small-Scale Enterprises in Ghana. In: Helmsing, A.H.J. and Kolstee, T.H., Eds., Structural Adjustment, Financial Policy and Assistance Programmes in Africa, IT Publications, London, 53-70.

[21]   Daniels, L. and Ngwira, A. (1993) Results of a Nation-Wide Survey on Micro, Small and Medium Enterprises in Malawi. GEMINI Technical Report No. 53, PACT Publications, New York.

[22]   Fisseha, Y. (1992) Small Scale Enterprises in Lesotho: Summary of a Country-Wide Survey. Gemini Technical Report No. 14, Development Alternatives Inc., Washington DC.

[23]   Daniels, L. and Fisseha, Y. (1992) Micro and Small Scale Enterprises in Botswana: Results of a Nation-Wide Survey. Gemini Technical Report No. 46, Development Alternatives Inc., Washington DC.

[24]   Fisseha, Y. and McPherson, M.A. (1991) A Country-Wide Study of Small Scale Enterprises in Swaziland. Gemini Technical Report No. 24, Development Alternatives Inc., Washington DC.

[25]   Gallagher, C. and Robson, G. (1993) The Job Creation Effects of Small and Large Firm Interaction. International Small Business Journal, 12, 23-37.

[26]   Okoye, E.K. (2008/2009) Repositioning SMEs in Onumba, Anambra State, Nigeria.

[27]   Anheier, H.K. and Seibel, H.D. (1987) Small-Scale Industries and Economic Development in Ghana: Business Behavior and Strategies in Informal Sector Economies. Breitenbach, Saarbrücken.

[28]   Schmitz, H. (1995) Collective Efficiency: Growth Path for Small-Scale Industry. Journal of Development Studies, 34, 529-566.

[29]   Effah, B., Boampong, E., Asibey, O., Pongo, N.A. and Nkrumah, A. (2014) Small and Medium Bamboo and Rattan Enterprises in Economic Empowerment in Kumasi: Perspectives of Producers. Journal of Social Economics, 1, 11-21.

[30]   Ogunsiji, A.S. and Kayode, L.W. (2010) MSME Contribution of Economic Development.

[31]   Beck, D.-K. and Marsimovic (2009) MSMEs Catalyst for Economic Growth, Entrepreneur/Income Generation and Poverty Reduction.

[32]   Steel, W.F. and Webster, L.M. (1991) Small Enterprises in Ghana: Responses to Adjustment. Industry Series Paper No. 33, The World Bank Industry and Energy Department, Washington DC.

[33]   Sha, S. (2009) Enhancing the Strategy for Developing Small Growth Potential Firms in the Eastern Cape.

[34]   Stokes, D. and Wilson, N. (2006) Small Business Management and Entrepreneurship. 5th Edition, Thomson Learning, London.

[35]   Mason, R.D. (1998) Statistical Techniques in Business Economics.10th Edition, McGraw-Hill, New York.

[36]   Aryeetey, E., Baah-Nuakoh, A., Duggleby, T., Hettige, H. and Steel, W.F. (1994) Supply and Demand for Finance of Small Scale Enterprises in Ghana. World Bank Discussion Paper, No. 251.

[37]   Pasanen, M. (2006) SME Growth Strategies: A Comparison of Young and Long-Lived Firms. Unpublished PhD Thesis, University of Kuopio, Kuopio.

[38]   Baloyi, J.K. (2010) An Analysis of Constraints Facing Smallholder Farmers in the Agribusiness Value Chain: A Case of Farmers in Limpopo Province. Unpublished Master’s Thesis, University of Pretoria, Pretoria.

[39]   Nieman, G. and Nieuwenhuizen, C. (2009) Entrepreneurship. A South African Perspective. 2nd Edition, Van Schaik, Pretoria.

[40]   Kalleberg, A.L. and Leicht, K.T. (1991) Gender and Organisational Performance: Determinants of Small Business Survival and Success. Academy of Management Journal, 34, 136-161.

[41]   Keats, W.B. and Bracker, J.S. (1988) Towards a Theory of Small Firm Performance: A Conceptual Model. American Journal of Small Business, 12, 41-58

[42]   Okpara, J.O. and Wynn, P. (2007) Determinants of Small Business Growth Constraints in a Sub-Saharan African Eco nomy. SAM Advanced Management Journal, 72, 24-35.

[43]   Parker, R., Riopelle, R. and Steel, W. (1995) Small Enterprises Adjusting to Liberalisation in Five African Countries. World Bank Discussion Paper, No. 271, African Technical Department Series, The World Bank, Washington DC.

[44]   Ronge, E., Ndirangu, L. and Nyangito, H. (2002) Productive Sector Division, Kenya Institute for Public Policy Research and Analysis, KIPPRA Discussion Paper No. 20, November 2002. Journal of Business and Entrepreneurship, 9, 47-58.

[45]   Du Rietz, A. and Henrekson, M. (2000) Testing the Female Underperformance Hypothesis. Small Business Economics, 14, 1-10.