The Alchemy of SME Growth

• The Risks
•The Challenges
•The Opportunities
The SME Sector As A Growth
Catalyst
• The Risks
•The Challenges
•The Opportunities
 INTRODUCTION
Why we need to develop the SME sector aggressively …

• Our thinking about growth and decay is dominated by the image of a single
lifespan, animal or vegetable. Seedling, full bloom and death.

• “The flower that once has blossomed forever dies. But for an ever-
increasing society, the appropriate image is a total garden, a balanced
aquarium or other ecological system. Some things are being born, other
things are flourishing, still others are dying – but the system lives on” - John
Gardner, Self-Renewal, The …. And the Innovative Society
 THE CHALLENGE
Are we prepared to take on the challenge …

• “We live in an era of rich opportunities. Our experience suggests that

growth prospects are limited more often by management failings than by
economic realities.

• The question for underperforming companies is thus not whether growth is

possible, but whether they are prepared to take on the growth challenge.” –
Mehrdad Beghai et al, The Alchemy of Growth
 THE CHALLENGE
We must break with our past beliefs …

• “As managers get their house in order, they also should begin to think more
expansively about new business opportunities.

• To do so, they must break the constraints of ingrained beliefs. Mehrdad

Beghai et al, The Alchemy of Growth
 WHO ARE THE SMEs?
The picture on our minds today …

• Small-scale operations with no growth agenda

• Indiscipline
• Risky
• No governance structures (finance/accounts, marketing, sales, HR, etc)
• Keep no books
• Narrow-based ownership (generally individual)
• Reliance on indigenous/own resources
• Labour-intensive
• Poor skills base
• Unregulated
 WHO ARE THE SMEs?
How should we see them …

• They are not all small – we must avoid generalisations

• They are indisciplined because they have not received the training of
discipline
• Their risk has been a factor of ideas, innovation management support, and
supervision
• They apply relevant adaptable governance principles
• Family businesses for the foundation of Taiwan’s economy and success –
what lessons can we draw?
• Reliance on indigenous/own resources should be our business opportunity
• They are potential partners to drive our growth
 WHERE CAN WE FIND THEM …

• Urban

• Peri-urban

• Rural
 HOW CAN WE CATEGORISE THEM …

• Exporters • Services
– Hotels
• Retail / General Trading – Financial
– – Fast food
Importers
– – Chop bars
Distributors
– – Pharmacies
Wholesale
– Hair dressers
• – Funeral homes
Construction
– – IT / Communications
Roads
– – Tailors / Seamstresses
Building
– – Private security companies
Electrical
– – Primary and JSS Schools Montessories
Refrigeration
– – Motors; Mechanical, Electrical, Refrigeration
Interior decorators
– Architectural companies
– Building material suppliers
• Manufacturing
Property management companies – FMCG
– Agro-processors
• Mining – Capital Goods
– Suppliers – Packaging
– Transporters
Contract maintenance companies • Logistics
– Transporters
• Agriculture – Haulage
– Agri-chemical suppliers – Freight Forwarders / Clearing agents
– Agri-implement suppliers – Warehousing
 HOW BIG IS THE PIE?

• 75% - 80% of the GDP of Ghana is produced by SMEs

• At US$11 billion GDP, SMEs deliver approximately US$8.8 billion annually

• In 2006 in Barclays Ghana, we did a total of US$X.X of business with SMEs

 WHERE SHOULD WE FOCUS?

• We should focus on the growth sectors

– Retail

– Services

– Wholesale

– Distribution

– Construction

– Warehousing (allied to importing and exporting SMEs)