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Sme Development in Ghana

In: Business and Management

Submitted By Henry265
Words 1907
Pages 8
INTRODUCTION
There is no universally agreed definition of Small and Medium Enterprises (SMEs). Some define them in terms of their total revenue, while others use the number of employees as an indicator. The European Union defines a medium-sized enterprise as one with a headcount of 250, a small firm as one with a headcount of less than 50 and a microenterprise as one with a maximum of 10 employees. The National Board for Small Scale Industries (NBSSI) which is the regulatory body for SMEs in Ghana defines SMEs in terms of both fixed asset and number of employees. It defines an SME as an enterprise with turnover greater than US$200,000 and not more than US$5 million equivalent (NBSSI)

The SME market constitutes the vast majority of businesses in Ghana and over the years has evolved to become the key supplier and service provider to large corporations, including multinational and transnational corporations. Principally, SME’s has contributed to:
Expanding output;
Providing value-added activities in the manufacturing sector;
Creating employment opportunities especially in the services sector;
Contributing to broadening Ghana‟s export base;
Increased competition;
Innovation;

SMEs are important to almost all economies in the world, especially to those in developing countries. They contribute to productivity and job creation; they serve as a nursery for larger firms constituting the next step for micro enterprises (Palma and Gabriel, 2005).

In addition, SMEs tend to be the primary driver for job creation as they are labor intensive and employ more labor per unit capita than larger enterprises thereby creating more jobs in the economy. This is also evident in developing countries like Ghana, as it is estimated that the sector employs about 35% of labor (Mensah and Rolland, 2004). Again according to Sowa et al (1992), even for some public…...

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