Small and Medium Enterprises have many challenges to contend with in their business operations. Top on the list is arguably the age-old trouble of access to funds to finance different aspects of their operations. Finance is a critical need to grow business but how and where can you access it? One school of thought believes there’s money out there for SMEs but the contending factor is how to gain access to such funds.

Seth Twum Akwaboah, Chief Executive Officer of Association of Ghana Industries asserts that access to short-term capital has encouraged trade at the detriment of industry. “There is ample evidence to the improvements in access to short-term capital but medium to long-term capital remains a challenge which is having a telling effect on the country’s quest for industrialization,” asserts the AGI boss. Seth Twum Akwaboah believes the drop in policy rate, and treasury bill rate should signal a drop in interest rate which will be good for businesses to access capital for their businesses.

Government has a role to play in ensuring there is some predictability in the macro sector of the economy to send some strong signals of business confidence across the business community. Banks will need to better understand the business of the SMEs to be able to serve them well. At a business forum hosted by Invest in Africa- African Partner Pool, it came to light that most entrepreneurs believe there is room for improvement with regards to services rendered by their bankers. An entrepreneur in logistics and supply in the mining sector bemoaned the failure of his bankers to understand the nature of his business’ seasonal rise and dips which affected him losing out on contracts to some multinationals.

If the challenge of capital for businesses can be surmounted, bankers need to understand their clients-businesses and provide tailor-made products and services to serve their needs on a timely basis. It was amply evident during interactions with some captains of SMEs that at times funds are made available at the period when business cycles are at the bottom. These funds sit in the accounts of SMEs and accumulate high interest charges. There is  the likelihood of mishandling such unutilised capital.

Additionally, there should be the formation of sector-focused banks (specialized banks) to serve the needs of particular sector/industries in the economy. The concept and growth of commercial banking in Ghana has outlived its infancy and ought to be focused on sector-specific banking. With the planned inception of Construction Bank and Ghana Home Loans acquiring universal banking license, it is the view of industry watchers that they will focus on their primary objective of financing the construction, real estate and mortgages sector in Ghana. And with government’s industrial policy on One District One Factory, the ADBs, NIBs, Construction Banks, and other commercial banks should be positioned to help provide capital for indigenous businesses.

Aminu Ibrahim of African Partner Pool believes SMEs can take advantage of other means of funding which are deviations from the popular bank loans. Private equity and venture capital funds are some of the creative ways to raise funds for SMEs.

Private equity is capital that is not noted on a public exchange. Private equity is composed of funds and investors that directly invest in private companies, or that engage in buyouts of public companies, resulting in the delisting of public equity. Investors don’t just give you the funds and sit back, the business gains immensely from the expertise of the investors. They look for an idea which is commercial, can sell and grow the business. With the right structures in place and a solid team, you are good to go with equity investors.

Capital for private equity is raised from retail and institutional investors, and may be used to expand working capital within an owned company, make acquisitions, or to strengthen a balance sheet. The majority of private equity consists of institutional investors and accredited investors who commit large sums of money for long periods of time.

Mirepa Capital is a local Private Equity firm which invested in Wear Ghana (makers of men and women’s evening, formal, casual and street wear). Sam Yeboah CEO of Mirepa Capital mentioned to a group of Ghanaians in the Diaspora at an Investment Seminar that it’s been a success story for his firm investing in this fashion startup. His company provided both the funds and the expertise needed to run a successful startup.

Venture capital (VC) is a type of private equity. This form of financing is provided by firms to small, early-stage or emerging firms that are deemed to have high growth potential, or which have demonstrated high growth (in terms of number of employees, annual revenue, or both). Venture capital investors are normally willing to share the risk with the entrepreneur, something the banks shy away from. Banks are only willing to lend to businesses that can provide evidence of a guaranteed payback, but the venture capitalist is patiently willing to share risks and grow along with the business.

In Ghana the Venture Capital Trust Fund plays a very vital role in providing venture capital to businesses. The fund, for the first time in four years, has been allocated GHC 219million in the 2017 budget to support Small and Medium Enterprises (SMEs) and drive up economic growth through equity investments. The allocation is expected to offer alternative and cheaper source of capital for hundreds of small businesses across the country.


There are varying means of financing your business. Businesses must focus on what alternative means suits their needs.