A REVIEW OF FINANCING ISSUES AMONG MICROENTERPRISES IN GHANA

 

A REVIEW OF FINANCING ISSUES AMONG MICROENTERPRISES IN GHANA

 

There are various financing utilities provided by financial institutions and agencies for SMEs in Ghana. However, microenterprises, which are the major component of SMEs, still face difficulties in reaching these financing sources. Most of the financing sources are benefiting small and medium enterprises. This is in contrast to Microenterprises where their financing applications are always being denied. Thus, there are financing issues among microenterprises in Ghana. These issues lead to the financing gap between the small and medium enterprises and the microenterprises in Ghana. This paper attempts to investigate why this financing gap exists in situations in which various agencies offer various forms of financing. A review of past researches and literature revealed that many formal financial institutions are reluctant to provide financing for most microenterprises as compared to high-performing SMEs from small and medium enterprises. The issues are that most of the microenterprises are new and small and hence are not capable of providing collateral and sufficient financial data demanded by the banks in their loan application. They are considered risky borrowers by the financing institutions. The microenterprises facing this gap have the potential to grow their business further and capable of creating more job opportunities for society. Thus, equal opportunities should be given to them by eliminating this financing gap.