The advent of the twentieth Century introduced the world to quite a number of things, ranging from new discoveries in science and technology but more so, it gave birth to what is now the household clichÃ© by name small and medium enterprises put simply as SMEs.
Acclaimed by the 2015 World Bank economic report to contribute an average of 55% of GDP across most countries in the world and creating over 65% of employment opportunities.
In Ghana for instance (Ghana Statistical Service), SMEs account for about 92% of registered companies and provide over 90% of manufacturing jobs as well as over 45% of the nationâ€™s GDP. However, as SMEs continually face parallel challenges of lack of access to finance, non-business supportive government policies across developing countries (particularly in Africa), etc. there is a growing need to evaluate the real state of affairs for this unavoidably vital sector, bring the attention of the public and policy makers and facilitate the necessary awareness to guarantee support for it both on the side of the national economic decision maker as well as the manufacturing factory workers whose livelihood depends on the survival and progress of this sector.
According to the organization of African Small and Medium enterprises, SMEs are any organization whether for profit or non â€“ profit with a revenue base of up to thirty million dollars ($30m) and across Africa there are many in this category or who have the potential to operate on this scale. Government of most developing countries have also not made this sector a priority.
While the likes of India, boost of both a specialized government department or ministry that provides direct non â€“ financial business support services such as registration, tax policies, management advisory, etc. and an apex bank dedicated to providing direct non collateral capital funding for SMEs-the Small Industries Development Bank of India, most countries like Ghana, Nigeria, etc., are only now adopting similar measures but at a pace that is rather embarrassing considering the role of SMEs in these economies.
High interest rates from commercial banks and a demand for unreasonable collateral for capital loans, poor or ineffective tax policies, inadequate access to information for business legalities, has choked millions of micro, small and medium enterprises and left this life wire of developing economies operating largely below its potential.
In moving forward, there ought to be a paradigm shift in the kind of leadership offered in this sector across the developing world, particularly Africa, there should be an establishment of ministry, government department or agency dedicated to Micro & SMEs support (practically, not just on paper), an effective monetary regulatory policy that will provide leverage for banks to enable them finance new businesses at a minimal cost. These basically and other measures unique to the countries concerned should be adopted to drive our SMEs and create more vibrant economies in the 21st century.