CONTRIBUTION OF SMALL AND MEDIUM ENTERPRISES TO POVERTY REDUCTION IN THE WA MUNICIPALITY

Abstract

In the developed and developing economies, small businesses are recognized as the main engines for growth and development because of their significant contributions to economic growth and poverty reduction. This made the development of the sector critical to the overall economic and sustainable growth of the Ghanaian economy. Their development is crucial in Ghana’s pursuit to improving the economy and achieving the sustainable development goals (SDGs). The present study was conducted in the Wa Municipality to look at the contributions of SMEs to poverty reduction. The study adopted a mixed method approach and 270 SMEs owners were randomly sampled and primary data collected using questionnaire and interview. The data was analysed using charts and tables. The findings revealed that SMEs are a major contributor in income of proprietors and employees. Incomes of respondents had increased significantly and these has led to a significant decrease in the poverty levels of SMEs proprietors and employees. Also their savings had increased. SMEs were also seen as a major source of employment creation. Moreover, the study revealed that SMEs have experienced growth over the years and that respondents had benefited from the growth. However, the study revealed that SMEs are faced with challenges such as financing constraints, input constraints, commodity pricing, market constraints, managerial constraints, and security constraints. In the developed and developing economies, small businesses are recognized as the main engines for growth and development because of their significant contributions to economic growth and poverty reduction. This made the development of the sector critical to the overall economic and sustainable growth of the Ghanaian economy. Their development is crucial in Ghana’s pursuit to improving the economy and achieving the sustainable development goals (SDGs). The present study was conducted in the Wa Municipality to look at the contributions of SMEs to poverty reduction. The study adopted a mixed method approach and 270 SMEs owners were randomly sampled and primary data collected using questionnaire and interview. The data was analysed using charts and tables. The findings revealed that SMEs are a major contributor in income of proprietors and employees. Incomes of respondents had increased significantly and these has led to a significant decrease in the poverty levels of SMEs proprietors and employees. Also their savings had increased. SMEs were also seen as a major source of employment creation. Moreover, the study revealed that SMEs have experienced growth over the years and that respondents had benefited from the growth. However, the study revealed that SMEs are faced with challenges such as financing constraints, input constraints, commodity pricing, market constraints, managerial constraints, and security constraints. These problems, if not looked at, will hinder the development of SMEs in Ghana. Based on these findings the study recommends that funds should be made easily accessible to SMEs by institutions concerned, support services should be provided to SMEs by the various stakeholders and that government should pay more attention to the SMEs sector due to its contribution to economic development.