Small And Medium Enterprises Access To Finance In Ghana: A Critical Review Of Progress, Challenges And Prospects

Abstract

Small and medium enterprises in Ghana account for about 90% of businesses. However, Ghana faces the most significant financing gap for SMEs, with an estimated $4.8 billion deficit. The current study reviewed the sources of financing for SMEs and their progress, challenges and prospects in Ghana from 2016 to 2023. Using a simple random sampling approach, a sample size of 121 SMEs was obtained from 12 of the 16 regions in Ghana. Cross-tabulation with Chi-square analysis and correlation analysis were adopted for the analysis. The study findings showed that SMEs in Ghana predominantly rely on internal funds and short-term debt, with limited access to equity financing, grants, and government financial support. The study further found that SMEs have a high cost of finance and a complex nature of access to finance regarding the provision of collateral and financial statements. The study recommends that the Government expand soft loans.