Small and Medium Enterprises (SMEs) are, without question, the backbone of Ghana’s economy. Representing over 90% of businesses in the country, SMEs contribute roughly 70% to the nation’s Gross Domestic Product (GDP) and account for about 85% of manufacturing employment. They drive over 80% of the total workforce employed in this sector, particularly in rural and peri-urban areas, where they foster economic inclusion and resilience. However, despite their critical role, SMEs continue to face significant hurdles that hinder their growth and sustainability. Chief among these is access to finance.
The International Finance Corporation (IFC) indicates that there is a financing gap of over $331 billion for formal SMEs in sub-Saharan Africa, with Ghana’s SMEs contributing a significant share to this figure. The financing gap for SMEs in Ghana is estimated to be over $5 billion, leaving many businesses struggling to access the credit and capital needed to thrive. For women-led businesses, the situation is even more dire. Despite the fact that women-owned businesses represent about 44% of all SMEs in Ghana, they face a staggering financing gap. Research shows that women entrepreneurs in Ghana are 20% less likely to obtain formal financing than their male counterparts. In sub-Saharan Africa as a whole, women-led SMEs face an estimated $42 billion financing deficit.
This financing gap has significant implications for economic development. Women entrepreneurs, for example, tend to reinvest up to 90% of their earnings in their families and communities, compared to 40% for men. This means that when women-led businesses are underfunded, the broader social and economic benefits of their success are also constrained. This not only stifles the potential for economic growth but also hinders progress toward greater social equity and improved livelihoods across Ghana.
As a leading financial institution in Ghana, Stanbic Bank recognizes the urgency of addressing these challenges. Our mission to “drive Africa’s growth” is not just a commitment but a call to action. We understand that the growth of our continent is inextricably linked to the success of its SMEs. To this end, we are dedicated to bridging the financing gap that constrains SMEs, especially those led by women.
To bridge this gap, it is imperative to explore and implement innovative financing solutions tailored to the unique needs of SMEs. Traditional banking models often fall short when it comes to serving SMEs, primarily due to the perceived risks associated with these enterprises. However, new financial products, such as invoice discounting, supply chain financing, and fintech-driven lending platforms, are emerging as viable alternatives to traditional bank loans. These products allow SMEs to leverage their receivables or digital payment histories to access much-needed capital.
In addition, blended finance, which combines public and private sector funding, can play a pivotal role in de-risking SME investments and making them more attractive to investors. Development finance institutions (DFIs) and impact investors are increasingly looking at ways to support SMEs through blended finance models, providing a mix of grants, concessional loans, and equity investments.
At Stanbic Bank, we are particularly focused on supporting women-led SMEs. We believe that empowering women entrepreneurs is crucial not only for gender equality but also for the overall economic health of the country. Our programs are designed to provide women entrepreneurs with not just access to finance, but also with the training, mentorship, and networks they need to succeed.
Through partnerships with international organizations, we have launched several initiatives aimed at closing the gender financing gap. These initiatives include tailored loan products for women, capacity-building workshops, and financial literacy programs. By providing women entrepreneurs with the tools and resources they need to succeed, we are helping to unlock the full potential of Ghana’s economy.
Our efforts are also aligned with the United Nations’ Sustainable Development Goals (SDGs), particularly Goal 5 on gender equality and Goal 8 on decent work and economic growth. By empowering SMEs, and particularly women-led enterprises, we are not only fostering economic growth but also promoting social equity and improving livelihoods across the country.
Bridging the finance gap for SMEs is not just the responsibility of financial institutions like Stanbic Bank; it requires a concerted effort from all stakeholders, including government, private sector, and international partners. We must work together to create an enabling environment for SMEs to thrive, by improving access to finance, enhancing financial literacy, and providing the necessary infrastructure and support systems.
As we look to the future, it is clear that the success of Ghana’s economy will depend on the success of its SMEs. By closing the financing gap, particularly for women-led businesses, we can unlock new opportunities for growth, job creation, and social development. At Stanbic Bank, we are committed to playing our part in this journey, and we invite others to join us in driving Africa’s growth.
