The General Manager in charge of Investments at the Venture Capital Trust Fund, Hamdiya Ismaila has identified the lack of capacity on the part of Small and Medium Scale Enterprise [SME] owners as one of the banes of the SME sector.
Speaking on Multi TV’s current affairs show, PM EXPREESS, the Investment Manager noted that apart from issues of funding that SME operators have to grapple with, the availability of markets and access to modern technology are some of the major problems SMEs have to contend with on a regular basis.
She stressed the importance for SME operators to sharpen their management skills to enable them effectively manage their businesses.
The Executive Director of the Association of Ghana Industries [AGI], Seth Twum-Akwaboah who was also on the show noted that if the challenges SMEs faced were dealt with, it would enable them expand their operations and create jobs for the unemployed in the society.
According to him, over 70 percent of products imported into the country could have been produced right here in Ghana if only the country’s manufacturing sector was adequately resourced.
He blamed the country’s over reliance on imports on the stress and difficulty in accessing funds “especially the manufacturing sector [which] is even worse because most banks provide short term facilities [three months and six months grace period] so to get medium to long term funding to do expansion [and to] buy equipment is very challenging. The level of employment that we expect SMEs to contribute, we are not getting” he explained.
Mr. Twum-Akwaboah was also quick to add that the SMEs are not able to match the cost of imports because of their lack of technology which would have meant operating at a very efficient level to lower the cost of production thereby ensuring a competitive advantage.
According to Hamdiya Ismaila, the Venture Capital Trust Fund has so far lent support to some 42 SME businesses. “We’ve done a couple of them and trust me they are not very far away from us. We’ve done a toner company that actually manufactures toners in Ghana. We do start ups, we do early stage and we do growth. In fact 66 percent of our portfolio companies are start ups, and we’ve done a couple of distressed companies”.
But the AGI Executive Director was unimpressed with the number of companies that have so far benefited from the Venture Capital Trust Fund. According to him, “it comes back to the question of impact. If Venture Capital all this while could only support 42 companies then it means that the overall impact will not be that much.”
He however sympathized with the intervention outlet explaining that if they are not adequately resourced and also big enough to cover a large number of enterprises, then it becomes pointless to set them up in the first place.
He added that consequently it would be unfair to expect one particular institution to make so much impact or solve all the SME problems.
“Indeed part of the reason why the enterprises are struggling is that their problems are many; when you solve one, the other one is also there waiting. So if it is financing issue, you solve the financing issue, but then there is a problem with equipment, there is a problem with management, there is problem with the business environment in general” he added.
The Venture Capital Trust Fund which was set up by an act of Parliament, Act 680 was set up to assist businesses by way of equity investments or long term investment.
Hamdiya Ismaila insisted that the fund does not lend money to businesses but rather goes into partnership with them in order to help them set up, or to restructure, help with recruitment, and also build capacities with the foresight to exit after six years.
“We just don’t bring in money; we bring in expertise and build capacities because the idea is not for us to leave the company as distressed as it was”, she pointed out. She lamented that they could do more but for the unwillingness on the part of most enterprises to share ownership.
Story by Adwoa Dansowaa Awuku/ Multi TV
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