Across the world, Small and Medium Scale Enterprises (SMEs) have been recognized as a critical tool not only for general economic growth, but also for empowering citizens and raising standards of living. In Ghana, to say the SME sector is the backbone of the Ghanaian economy is a truism that cannot be denied.
Literature is replete with statistics on the contribution of the SME sector to the economy of Ghana. Available data show that SMEs constitute about 85% of all businesses in Ghana and they contribute about 70% of Ghana’s Gross Domestic Product (GDP). With regard to formal sector employment, SMEs account for over half of all full-time employment. These contributions, notwithstanding, SMEs in Ghana are saddled with varying challenges that suppress their growth.
According to the International Trade Center (ITC), in most developing and emerging economies like Ghana, SMEs face market volatilities, uncertainty in the policy and regulatory environment, lack of information on options for diversifying markets and products, as well as fragmented social structures and institutional support networks. It has been established that firms remain competitive and create higher value by acquiring skills, capabilities and functions, among others. This requires deliberate measures if we are to improve the effectiveness of SMEs.
Over the years, various players within the entrepreneurial ecosystem have implemented strategies to enhance the operations of players within the Ghanaian SME sector. Business development tools such as Business Incubators have become an effective model to drive quality and sustainable businesses. It has been suggested in many quarters that for the development of entrepreneurship and SMEs in any country, business assistance such as business incubators are the much needed business model to achieve it. In Ghana, there are over 40 hubs identified by the Ghana Hubs Network, a secretariat responsible for representing and serving as a liaison for the hubs.
Business incubation programs have evolved to serve better the needs and gaps of businesses, especially in their formative and growth stages. The concept of business incubation implies the offering of shared facilities such as working spaces, offices, hands-on organization support, and access to financing, networking and technical assistance that increase the success of ventures through the incubation phase. Business incubators provide entrepreneurs with an inexpensive start-up environment and a range of administrative, consulting, and networking services. In essence, these programs—which may be managed by economic development agencies, local governments, for-profit businesses, or colleges and universities—serve as homes for new companies. They offer low-cost space, shared equipment, and the comradeship of fellow entrepreneurs. At their best, incubators help new firms create jobs and revive communities.
Indeed, statistics indicate that incubated ventures stand a greater chance of survival than do other start-up businesses. This is because most barriers (such as credibility, cost of office space, access to coaches and mentors, access to finance, etc.) to entry are lifted through the interventions of the incubator program. In addition, the world’s increasingly technology-driven economy has spawned new wrinkles in the incubator concept in recent years, such as virtual incubation programs and incubator-like concepts being experimented internally within existing companies and corporations to drive innovation.
The potential incubators hold for SMEs are huge. The access to advisory and financial services, which many start-ups require for their growth and development are critical to growing firms in particular and the sector as a whole. In advanced economies, the business incubator concept has been woven into the business development fabric and are given critical attention.
For startups and SMEs to become sustainable, they need to get the foundation right and these include ensuring proper governance structures and compliance from onset. They also need to build a culture that allows for high talent attraction and retention and lastly, they need to establish the discipline of keeping proper financial records. With all these measures, notwithstanding, the government needs to create an enabling environment and startup/SME friendly policies that reduce the red tapes to building the momentum and credibility to meet industry standards over time.
Among the successful incubation centres in Ghana is the Stanbic Business Incubator, also known as the SBIncubator. This is a corporate social initiative of Stanbic Bank Ghana to provide business advisory, coaching & mentorship, access to market, networks, new markets where the Standard Bank Group has operations in. This is a critical tool that has the potential to transform Ghana’s SME sector and enhance its contribution to the country’s economy. The SBIncubator offers a world class coworking space located at Silver Star Tower, Airport City. Through the bank’s Staff Volunteer Mentorship program, the bank staff offer their expertise and time to members of the SBIncubator Community. To learn more about the SBIncubator.