Bank of Ghana: Enabling MSME Growth Through FinTechs

Posted on Jun 22, 2022 by The FinTech and Innovation Office, Bank of Ghana


Micro, small, and medium enterprises (MSMEs) provide over 80% of global manpower and are a major contributor to Gross Domestic Product (GDP).[i] In Ghana, the MSME sector is estimated to employ more than 80% of the workforce and generates over 70% of GDP.[ii] Data from Ghana’s Registrar General’s Department (RGD) indicates that 92% of businesses are registered as MSMEs.[iii] The majority of businesses within the MSME sector are mainly sole proprietorships, and include small retailers, market women, farmers, and artisans.

Axiomatically, MSMEs have the potential to accelerate economic development necessary for wealth creation and poverty reduction. This is due to the sector being the largest employer of vulnerable groups such as women, youth, and low-skilled workers, in particular, who are most likely to be financially excluded.[iv]

Challenges to MSME Sector

Despite the significant contributions of MSMEs to the Ghanaian economy, the sector is plagued with many challenges. The poor state of business support infrastructure adversely affects the development of MSMEs. These constraints include the lack of a national address system, national centralized identification system, all-year-round motorable road network and transportation system, warehousing facilities, and the availability of reliable and affordable power, water, and telecommunications infrastructure.[v]

The classification of an MSME has been in contention for some time. In Ghana, several microenterprises still do not fit adequately in the categories they are classified in and are therefore marginalized through the registration requirements of their businesses. This also places their activities outside the scope of classification and valuable data is not collected.[vi]

Furthermore, many MSMEs lack access to credit facilities due to the inability to formalize their operations. Without adequate data on ownership, business turnover, and financial footprint, it is very difficult to assess the risk profiles of MSMEs. Where credit is available, the collateral demanded or interest rates offered on loans do not make it accessible or attractive.[vii]

Along with lack of credit, many MSMEs have limited access to equipment and technology. Due to the small nature of these enterprises or their locations, particularly in rural areas, access to basic technology tools to scale businesses is nonexistent.[viii] In addition, many owners are unable to purchase these tools or equipment even if they were available, nor do they have the skills or knowledge for usage.[ix] For example, the use of social media requires internet connectivity, broadband, and a feature phone or computer, which many owners may not have. The few that do may not be tech-savvy enough to operate the device.

Also, the regulatory requirements for business registration are a barrier to many MSMEs. Legal/ regulatory requirements to participate in government tenders and/ or acquisition of licenses or certificates to operate can be very demanding and frustrating to the average sole proprietor. Fragmentation of regulatory requirements and the high cost of compliance can also prolong approval or deter compliance in order to operate or undertake certain businesses in Ghana.

Besides limited access to market intelligence on account of lack of data on businesses in general and the informal nature of the enterprises, MSMEs are unable to ...

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[i] Asare, A. (2014). Challenges affecting SME growth in Ghana. OIDA International Journal of Sustainable Development, 7(06), 23-28. Asare, A. (2014). Challenges affecting SME growth in Ghana. OIDA International Journal of Sustainable Development, 7(06), 23-28. Last accessed on 26th May 2022.

[ii] Challenges affecting SME growth in Ghana.

[iii] Registrar Generals Department Report, 2022. Last accessed on 25th May 2022 at

[iv] Kayanula, D., & Quartey, P. (2000). The policy environment for promoting small and medium-sized enterprises in Ghana and Malawi. Last accessed on 26th May 2022.

[v] National Micro, Small, And Medium Enterprises (Msme) Policy Ghana, (Final Draft) assessed at on 25th May 2022.

[vi] National Micro, Small, And Medium Enterprises (MSME) Policy Ghana

[vii] Ibid.

[viii] Ibid.

[ix] Ibid.