Bureaucracy, Nepotism and Corruption; Its Effect on SMEs in Ghana
On today’s edition of #TEFAdvocacy, we will be shedding light on the challenges faced by Ghanaian entrepreneurs.
According to Mensah et al Entrepreneurs have complained about the lack of support for SMEs due to politicization of government-sponsored business loans and corrupt officials in charge of government-sponsored organizations. Focus group interviews with entrepreneurs who have participated in the NBSSI and MASLOC loan schemes over the years cited excessive government officials’ control and politicisation of funding, victimisation of entrepreneurs, and corruption as the main reasons why many SMEs have gone bankrupt, especially those that are not supporters of a ruling government.
Ghanaian Entrepreneurs have complained of delay in payments for public sector contracts. Pulse.com.gh reported that “Some angry members of the Ghana Chamber of Construction Industry (GCCI) are demanding payment of their outstanding arrears from the government. The aggrieved Contractors on Wednesday, July 10, 2019, stormed the premises of the Ministry of Roads and Highways and Transport, and descended heavily on the government for not paying them for contract works executed since 2016”.
Ghanaian entrepreneurs have complained of the bureaucratic nature of licensing new businesses. According to Nyarku and Oduro,1% increase in bureaucratic bottlenecks leads to 28.76% decrease in SMEs growth, which shows that there is a significant negative relationship between bureaucracy and SMEs growth.
We propose that there be new policies set on the basis for which government sponsored loans will be administered as well as active follow-up to make sure that these policies are being implemented.
We propose that the government ensure transparency in all activities, holding public officials accountable for maladministration and setting up independent judiciary to handle corruption cases therefore limiting the power of public officials to award contracts.
We propose that the Ghanaian government only award contracts for projects for which funding is already available. There should be a stipulated short timeframe for which all payments for contracts awarded are made.
We propose that the government can reduce bureaucracy in part by making it possible for SMEs to perform most of their activities online, activities like business registration, tax payment, property registration and goods clearance. The government should also come up with a policy stipulating a short timeframe for which business registration must take place to prevent any corrupt official from dragging the process.
~ Author: Opeyemi Ayodeji