A new academic study has found that small and medium-sized enterprises (SMEs) across Ghana are being held back by restricted access to credit, fragile supply chains, and complex regulatory requirements, despite the sector accounting for approximately 70 percent of gross domestic product (GDP) and 85 percent of manufacturing employment in the country.
The research, published in the International Journal of Research and Innovation in Applied Science, was conducted by Seth Amoako, a lecturer at the Akenten Appiah-Menka University of Skills Training and Entrepreneurial Development (AAMUSTED). Drawing on responses from SME operators and managers in the Bosomtwe District of the Ashanti Region, the study documents a sector whose economic weight far exceeds the support available to sustain it.
At the centre of the findings is the financing problem. Most surveyed businesses rely heavily on long-term loans from rural banks to fund their operations, not out of preference but because equity investment and commercial bank financing are largely inaccessible at their scale. Rural banks have partially filled the gap but are themselves constrained by capital shortages. High interest rates and collateral requirements remain the most consistently cited barriers, and the study finds that many SME owners lack the financial literacy needed to navigate existing support frameworks even when funding is available. Ghana’s estimated SME financing shortfall stands at approximately $4.8 billion, part of a broader gap of nearly $331 billion across Sub-Saharan Africa.
The Ghana Enterprises Agency (GEA) runs financing and capacity-building programmes aimed at this segment of the market, but the study notes a persistent disconnect between the availability of such initiatives and their uptake at the business level. Simplified application processes and interest rate structures better suited to small borrowers are among the practical interventions the researcher identifies as necessary to close that gap.
Supply chain instability adds further pressure. Delays in sourcing raw materials and goods regularly interrupt operations, generating lost revenue and broken customer commitments that small businesses can ill afford. The study points to infrastructure gaps in the Ashanti Region as a compounding factor, raising the cost of doing business for the smallest operators in ways that are structural rather than incidental.
Legal and regulatory compliance emerges as a third barrier. The research finds that many entrepreneurs are not unwilling to meet licensing and contractual requirements, but describe the systems for doing so as opaque, slow, and costly. Streamlining regulatory processes and providing accessible legal advisory support are identified as reforms that would reduce business attrition and encourage more enterprises to formalise, in turn broadening the tax base.
The study also identifies what is working. Businesses that have survived and grown consistently cite strong customer relationships and a deliberate focus on product quality as the primary drivers of their resilience, pointing to real commercial discipline that, the researcher argues, better infrastructure and financing conditions could convert into more substantial growth.
Ghana’s SME failure rate, with more than half of businesses collapsing within five years, has remained stubbornly high through successive policy cycles. The Bosomtwe findings suggest that the core obstacles are well understood and that the policy tools to address them exist. The outstanding question is whether implementation will match the scale of the challenge.
