Ghana’s unemployment situation appears to be getting worse as the current freeze on public sector recruitment paints a bleak picture.
While entrepreneurship has been touted as the game-changer, access to funds remains the main obstacle for small and medium-sized enterprises (SMEs) and even large-scale businesses.
For the unemployment rate to significantly reduce and for businesses not to fold up due to lack of funds, Ghanaians have been urged to resort to alternative sources of funding such as the Venture Capital Trust Fund (VCTF).
While one may have a viable business idea, financial institutions may be reluctant to provide loans to them due to lack of track record. Those who are able to secure loans at times struggle to pay back since it usually takes a longer time for startups in particular to break even or even make a profit.
The Chairman of the Association of Ghana Industries (AGI) for Ashanti, Bono, Bono East and Ahafo Regions, Mr. Kwasi Nyamekye, says many of his members, particularly startups, face a lot of challenges with respect to access to funding.
“With people who are starting up, some may have brilliant ideas, but to be able to sell your idea to an investor is a problem. For people to understand your concept and to get a grip of what you want to do, most people are unable to articulate it well. And if you’re not able to, it is difficult for some fund managers to accept your concept and fund it. So it is a challenge. That aside, most banks want a track record to see that the business was able to do this and that so putting their money in there, the money is not going to go to waste,” Mr. Nyamekye explained.
Citing his case as an example, Mr. Kwasi Nyamekye says he struggled in getting the needed funding support in expanding his business until he resorted to venture capital, which proved to be a viable alternative.
“I started my business with my own initial start-up capital. At some point I was in dire need of funding to boost the business and to expand. But then, it was difficult even to explain to the banks to buy into the idea was very difficult. With venture capital coming in at the time, it was God sent. It was very good because nobody will be on your neck at the end of the Month demanding interest or for you to pay the principal, except that they will grow with you and share the business with you,” Mr. Nyamekye added.
Available data shows that SMEs employ about 80 percent of Ghana’s population and contribute 60 percent to Gross Domestic Product (GDP). With this in mind and looking at the country’s prevailing circumstances, the Chief Executive of VCTF, Yaw Owusu Brempong wants persons into such businesses to find out more about ways of securing financial support. He made this statement during an engagement with SMEs and members of the AGI in Kumasi on the need to explore VCTF as an ideal alternative source of funding to support businesses.
“You know government is there to create an enabling environment for the economy for businesses to survive. From our end, we support startups and SMEs through fund managers. So we are doing our bit,” CEO of VCTF, Yaw Owusu Brempong stated.
He added that, businesses that take advantage of VCTF receive technical and other forms of assistance to enable them to grow.
“It is not just the money. They also give you technical assistance depending on your need. It may even be marketing and even recruitment. They also help you formalize your business. So they sit down with you and analyze the businesses, any area, or anything you fall short of, they will help you to put it together. That is why they are there to help you to create value in your business,” Yaw Owusu Brempong added.