Last updated: February 25, 2019
Topic: BusinessCompany
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Entrepreneurship is the most powerful economic force known to mankind. The Entrepreneurial Revolution that captured our imagination during the 1990s has now permeated every aspect of business thinking and planning. As exemplified by industry players and era definers like Sam Walton of Wal-Mart, Fred Smith of FedEx, Bill Gates of Microsoft, Mark Zuckerberg of Facebook, Alhaji Asuma Banda of Antrak Group of Companies, Mike Adenuga Jnr of Globacom, and Kofi Amoabeng of UT Financial Services, the applications of creativity, risk taking, innovation, and passion lead the way to economic development far greater than anyone could imagine.

Entrepreneurship is the process of creating or seizing an opportunity and pursuing it regardless of the resources currently controlled. Entrepreneurship is the process of creating something new with value by devoting the necessary time and effort, assuming the accompanying financial, psychic, and social risks, and receiving the resulting rewards of monetary and personal satisfaction and independence. Challenges to entrepreneurship development in Ghana.

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It is apparent that entrepreneurial activity is beneficial for Ghana both at a micro level in terms of creating stable and sustainable employment for individuals and at a macro level where it significantly increases a nation’s GDP. Yet Ghana has been unable to create and maintain the favourable environment needed to foster SMME development. There are a number of barriers which entrepreneurs in Ghana face.

According to Bridges. org (2002), the factors affecting entrepreneurial activity can generally be divided into four categories and these portray the exact situation in Ghana: ?Infrastructure: Quite often the barriers to starting and maintaining a business come down to simple, yet often insurmountable factors, such as lack of roads, electricity, water and other facilities. This challenge is very much a nation-wide phenomenon. Legal and regulatory framework: Governments need to have a positive perception of entrepreneurial activity, reduce the administrative burden on entrepreneurs, and coordinate among their agencies to ensure that the necessary resources are directed where they are needed. This challenge is made worse by the cumbersome nature of business registration procedures in the country.

According to the World Bank’s Doing Business 2007 indicators, it takes 12 procedures and 81days to start a business in Ghana. The centralization of the registration process at Accra also serves as an impediment to entrepreneurs’ efforts. Financial support: A major stumbling block for many potential entrepreneurs at the lowest end of the economic spectrum is lack of access to the credit or seed funding necessary to start a business. Entrepreneurs who are starting up larger businesses face difficulty raising investment capital and a lack of sound market-based policies. The average lending rate in Ghana of 30% serves as disincentive to entrepreneurs. Aside the interest rate issue, bureaucracy also tends to discourage entrepreneurial spirit.

Sourcing funds from the MASLOC goes through diverse bureaucracies which sometimes result in the politicization of the funds. Also, ignorance among entrepreneurs as to the availability of various sources of funds serves as another challenge in their quest for financial assistance. ? Social: The concept of entrepreneurship is not native to every culture or society. The fear of failure can be a barrier. Creativity and innovation are not always valued traits. Ghana has social systems that create dependence and hopelessness.

Women are discriminated against in this area generally on gender grounds. In our Ghanaian culture, the views of the child are generally not welcome. Such practices go a long way to stifle the creativity of the child as he or she matures. ?An additional barrier is the overarching mindset that entrepreneurship cannot be taught, that it is a creative and innovative way of thinking that comes inherently to some people and not to others. While it is true that some individuals are gifted with creativity to develop new ways of doing things, creativity alone is not sufficient.

Ideas must be matched with basic skills and an understanding of business practices and these are things that can be taught to help burgeoning entrepreneurs create successful businesses. ?Lack of education. Entrepreneurship has not been given much attention both in our various homes as well as our educational institutions. The government has not done any better in this regard. It is too challenging that it is very difficult differentiating a business man from an entrepreneur. The tomato seller at Central Market believes she is an entrepreneur.

Our educational system has failed us in this regard. Most schools do not teach on this area and even the few who do teach on this subject, little can be deserved of the knowledge imparted to the student. This challenge has ripple effects on several other challenges. The unawareness created by the lack of education causes the ignorance as spoken of under the financial support challenge The way forward A comprehensive approach to promoting entrepreneurship must work on three levels-individuals, firm and society.

To motivate individuals to become entrepreneurs, they should be made aware of the concept of entrepreneurship and this should be made sufficiently attractive option. They should be equipped with the right skills to turn ambitions into successful ventures. For entrepreneurial ventures to develop into healthy firms, supportive framework conditions are essential. These should allow firms to develop and grow, and not to unduly hinder contraction and exit. Entrepreneurial activity depends on a positive appreciation of entrepreneurs in society.

Entrepreneur’s success should be valued and the stigma of failure reduced. What does it takes to produce more entrepreneurs in Ghana? Despite recent improvements, Ghanaians still consider administrative barriers as a major hurdle to starting a business. According to the European Commission’s report on Benchmarking the Administration of Start-ups (2002), the average time taken to set up an individual enterprise in Europe is 12 working days and 24 for private limited liability company. However, these figures continue to fall each day.

For us to succeed as a country, there should be a one- stop-shop for creating a business. These one-stop-shops could be called Business Formalities Centres like what pertains in Portugal. These centres in Portugal help to facilitate the registration of firms. The centre should bring together all public departments responsible for different formalities required in registering a new firm. Future entrepreneurs can also obtain advice from a help desk Business start-ups have difficulties getting the seed and early-stage finance they need.

Access to finance remains a major barrier for new entrepreneurs. They have difficulty securing bank loans or finding risk capital. Banks want a positive track record and collateral-which new firms generally do not have. The attempt by the present government to make available some funds through Exim-guaranty Company Limited is a step in the right direction. However, since the acquisition of funds are still attached to the traditional banks, entrepreneurs still complain of going through the normal and difficult routine in securing seed money or capital.

In addition to bank lending, start-ups should have a better access to alternative sources of finance. Besides venture capital, the potential of informal investments e. g. family, friends or business angels should be further explored. Risks sharing between banks and investors in the private sector and public financial institutions specialized in SMMEs, or through mutual guarantee societies, is an efficient way of leveraging scarce public funds and has proved to be successful in increasing funding for business start-ups. A failed entrepreneur faces the stigma of failure.

Entrepreneurs going bankrupt and losing personal property is very prevalent. In addition to the social stigma, a personal bankruptcy implies severe legal consequences. This can results in jail terms. Discharge of remaining debts may take years; bankrupts may lose their possessions and be subject to certain restriction. Such consequences are justified in cases of fraud or dishonesty, but failure is an intrinsic part of economic life and a proportion of entrepreneurs go bankrupt because they cannot compete in them market.

Insolvency laws could be reviewed to reduce barriers to making a fresh start for honest entrepreneurs. This should not of course, unduly harm creditors? interests, which might increase their reluctance to invest in small and new ventures. Belgium has adopted its solvency legislation with a view to allowing entrepreneurs to attempt to rescue businesses when facing temporary problems and to liquidate non-viable firms as quickly as possible. Courts can declare honest bankrupt entrepreneurs to be excused allowing them to make a fresh start in business.

I hope Ghana will also quicken up with its Insolvency Bill that has been presented by the Attorney General’s Department to Parliament. People might be more willing to accept the risk of entrepreneurship if it were compensated by the prospect of reward in the event of success. A recent trend to reduce tax levels on the self-employed and small businesses is observed in the European Union and steps are being taken to reduce the tax burden on potential self-employed people. Our education system should be at the forefront in providing both skills and exposure as a contribution to fostering entrepreneurship. As a benchmark, we can look at the Sivitanidios Technical School in Athens, Greece. Here, students divide their time between theoretical courses and running a virtual enterprise. This programme can be replicated and extended to all our polytechnics and universities due to its positive results. A course in entrepreneurship could be added to the curricula of tertiary institutions which can cover entrepreneurship theory and practical guidance on preparing business plans.

Qualified and up to the task liaison officers could also be employed in these institutions to ensure that students receive advice and support for entrepreneurial career options. It must be emphasised that Kwame Nkrumah University of Science and Technology has already set the pace in this regard; yet we could still do better. Activities in support of students in tertiary institutions through the Students in Free Enterprise (SIFE) programme and the Captains of Industry Programme need to be strengthened and widened.

Again, the institution of the Growing the Young Entrepreneur Competition in the tertiary institutions should be given the needed push by industry and the government. Student organisations like Junior Business Chamber, International Association of Students Interested in Management and Economics (AIESEC), IAESTE etc should also be given a second look and their activities duly supported. Ghana can structure its campus programme in the likes of the Enterprise Ireland Programme. ?Women empowerment.

As the saying goes, “if you educate a man, you educate one person, but if you educate a woman you educate a nation”. A successful woman entrepreneur creates a successful family and a happy nation. Empirical evidence on the gender-growth nexus across countries suggests a significant potential for higher economic growth if existing barriers to investment and economic participation by women, could be addressed. Empirical analysis of the gender and economic growth nexus for Ghana suggests that a significant increase in the female literacy rate could produce an increase in real output growth by about one-half.

In other words, a significant improvement in gender equity, be it in terms of human capital accumulation, women’s economic participation or otherwise will have significant beneficial effects on economic growth rates amounting to about 2. 5 percent a year. This is significant for the quest to scale up growth rates to 8-10 percent in order to become a middle income country within 10 years and to meet the Millennium Development Goals ?Tax reliefs. Another policy the government of Ghana can enact is through the relief of taxes and ax vacations for young enterprises than giving tax relief to foreigners (multi nationals) who take away all the profits. Also, these tax reliefs and vacation would inspire many young people to start business since mostly the taxes scare them and therefore they think cannot make much as they start. ?Think globally, but begin locally. Empirical evidence shows that, majority of Ghanaian businesses are at the micro stage; and that only 5% of large companies in Ghana are Ghanaians’. This is not a good sign of development. As such entrepreneurs should look at the bigger picture by focusing on the world but use Ghana as his bedrock.

For example, in the mid 1990s, while the founder of the Oxford-based Internet Bookshop built up and sold a business for ?10million within five years, his counterpart at Amazon built a near-identical business worth $2billion over the same period. One reason for the difference in their thoughts was vision. Facebook is thriving at the back of a similar fate. Entrepreneurs are social creatures and not solo heroes. A way forward for the youth in entrepreneurship is to build and maintain relationships. Successful entrepreneurs are those who can develop the right kinds of relationships with others inside and outside their firm.