The Missing Middle and the Overlooked Small: Why Ghana Must Serve Both the ‘S’ and ‘M’ in MSME’s
In Ghana, the national conversation celebrates the Micro entrepreneur selling in the market and acknowledges the Small business owner operating from a rented shop. But we consistently overlook the "M"—the Medium enterprise. This is a critical policy blind spot.
Ghana's national conversation often highlights the Micro and Small entrepreneurs in the market and rented shops. However, this leaves the crucial "M" - Medium enterprises - overlooked. This is a significant policy blind spot, yet both "M" and "S" must be addressed to meet Ghana's industrialisation goals. The MSME sector is the economy's backbone, contributing 90% of businesses and 70% of GDP, but the Small and Medium segments are the smallest in numbers but carry the heaviest weight in job creation, value addition, and industrial growth.
To serve these enterprises effectively, we must clearly identify them. The GEA classifies MSMEs into Micro (1-5 employees, turnover below GH¢300,000), Small (6-29 employees, turnover between GH¢300,000 and GH¢6 million), and Medium (31-100 employees, turnover between GH¢6 million and GH¢18 million). Despite constituting only a small numerical fraction of businesses, Small and Medium enterprises collectively employ 80% of the labour force, with Small enterprises acting as the stepping stone from informal micro-enterprises to formal Small businesses, and Medium enterprises driving industrialisation with more sustainable, high-quality jobs.
Despite being more formalised than Micro businesses, Small and Medium enterprises face a US$4.8 billion annual financing gap. Only 35% have access to bank financing, and over 50% are completely shut out of formal credit. The high attrition rate (50%) among MSMEs is partly due to the "missing middle" phenomenon where businesses cannot scale from Micro to Small or from Small to Medium due to lack of access to scale-up support.
To integrate the "S" and turn Small enterprises into engines of growth, four strategies are proposed: bridging the financing gap through data-driven lending, targeted digital transformation for Small enterprises, formalisation and capacity building, and positioning Small enterprises as anchors in value chains. By focusing on these two critical segments simultaneously, Ghana can build a resilient industrial base that creates sustainable employment and drives inclusive growth.
Written by urgent.news from MyJoyOnline Ghana's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
