TechnoServe, in 2014 launched a new multi-year enterprise development programme to be implemented across the country dubbed Enhancing Growth in New Enterprises (ENGINE).
The program, with funding and support from the British Government through the Department of Foreign Development (DFID), seeks to address the challenges of early stage businesses and start-up
During a recent meeting with a cross section of entrepreneurs, implementers of the Enhancing Growth in New Enterprises (ENGINE), asked that government create a working hub (mini industrial zones) across the country to assist start-ups and early stage businesses to access cheaper space and office accommodation to help reduce the cost of starting a new business while offering cost effective alternative to businesses in their operations.
In an interview with the Economy Times, the Programme Director Samuel Baba Adongo, stated that such a move will foster co-location of businesses as well as ensure access to shared operating resources such as accounting services, advisory services and other infrastructure which will otherwise have been obtained at prohibitive cost if the start-ups do so individually.
The program is in recognition of the key role played by Micro and Small Enterprises (MSEs) in Ghana’s economy and it is important to note that, the vast majority of jobs in developing economies are provided by Micro and Small Enterprises (MSEs), and there is good evidence that the growth of young, small firms is a driver of economic growth.
There is a very strong culture of entrepreneurial activity in Ghana, as evidenced both by the high prevalence of owner-managed firms, and by the high value placed on it as a career choice (which is noticeably different from other developing countries).
However, there seem to be a low success rate of transformation from MSEs to larger, more productive companies due to a much higher rate of churning (i.e. the creation and destruction of firms), with as many as 20% of MSEs per year entering and exiting the market.
Markets have failed to nurture entrepreneurship particularly among young, small enterprises, or start-ups. And once an MSE has failed to grow in its first few years, it is much less likely to do so later. While business enabling environment constraints play a significant role, the failure of such companies to grow is also due to a lack of awareness of the right practices to follow; and an inability to access the right information and support to develop.
This includes access to finance, but also access to business development services and to the peer-to-peer networks that help incubate small businesses.
Focused intervention is therefore required to break this vicious circle of low returns and low expectations among entrepreneurs with potential to grow their businesses. Providing those MSEs identified as having the highest potential with the information, connections and tools that they need, will also help to create a self-sustaining network of support for such businesses.
Further, the World Bank estimates that if every entrepreneur with high potential were to create a single additional job, then total employment would increase substantially, with a greater effect in lower income countries.
The ENGINE program therefore seeks to transform the entrepreneurship landscape in Ghana through a Business Plan Competition aimed at attracting the best ideas from start-up entrepreneurs, combined with a package of aftercare that will provide business services, facilitate access to finance and create connections through business networks.
The target is to reach 5000 SMEs or businesses being start-ups and existing ones within a period of five years who will benefit from a range of training on business plan writing and business management with the best 100 SMEs each year emerging as top winners of the business plan competition receiving cash grants and support services or aftercare from about 500 finalists.
“ENGINE” identifies entrepreneurial men and women and equips them with the tools and networks they need to build competitive, self-sustaining micro and small enterprises that will accelerate economic growth and reduce poverty. The program taps into the high entrepreneurial energy of the Ghanaian, with emphasis on the youth and women engaged in early-stage, small enterprises referred to as start-ups (ie businesses that have been in operation from 0-3 years) and initially employ less than 20 people.
These businesses after being given aftercare, are also linked to financial institutions for financing opportunities to ensure growth and continuity of the businesses after the grant is exhausted. Businesses are also linked to the regulators of the business environment in Ghana such as the food and drugs authority, the registrar general’s department among others.
Commenting on the program’s achievements so far, Baba Adongo told the Economy Times that, since the launch of ENGINE in April, 2014, 176 MSEs have received awards in various forms with an additional 100 businesses expected to receive grants and technical assistance from the program by the end of this year. This will bring the total number of businesses to 276 within two years.
He added that, the team now wants to create a platform dedicated to marketing the products of its participants, thereby providing a cheaper source of quick funds to ensure continuity in the operations of the businesses and also promoting made-in-Ghana goods.
Mr. Adongo acknowledged that, the business environment is a bit tough and more challenging to the start-up businesses.
In enumerating some of the factors associated with the situation, he mentioned; high cost business operating in Ghana, poor labor work attitude, higher interest rate by financial institutions, lack of consistent supply of energy and raw materials as well as improper addressing system.
But, in the midst of challenges, Mr. Adongo believes there are opportunities for business owners and managers. Entrepreneurs can take advantage of these opportunities by developing innovative business solutions, ensuring zero tolerance to waste and identifying new markets locally and internationally.
Over the life of the project, ENGINE expects to achieve the following: Increased revenue growth of over 500 MSEs by an average of 400%; Creation of over 1,770 new jobs; 300 start-ups will gain access to finance through links to investors or financial institutions with at least a third (25% of programme participants) of these successful in securing commercial financial investment in their business ventures; and creation of a sustainable alumni network to promote effective networking and collaboration.
Souruce : Adnan Adams Mohammed