Insurance can play a crucial role in enabling the sustainability of Ghana's MSMEs
As Ghana marks Micro, Small and Medium-sized Enterprises (MSMEs) Day on 27 June, the nation will celebrate the entrepreneurs, traders, artisans and business owners who form the backbone of the country's economy, while also reflecting on the challenges that continue to limit the growth and sustainability of many small businesses.
SMEs are the lifeblood of Ghana's economy, accounting for approximately 92% of all businesses, contributing an estimated 70% of gross domestic product and providing around 85% of manufacturing employment. Their contribution extends far beyond economic output; they contribute to sustaining livelihoods.
Despite their significant contribution to employment creation, income generation and economic development, many MSMEs remain vulnerable to risks that can disrupt their operations and threaten their long-term sustainability. From fires and burglaries to illness, disability and liability claims, unexpected events can quickly undo years of hard work and investment.
Ghanaian SMEs brace the myriads of challenges facing them including but not limited to access to capital or finance, high cost of doing business, inadequate managerial skills, inadequate data and record-keeping and still keep their businesses going. The reality however is that many of them have gone down completely or at least seen reduction in their operations after the happening of disasters such as fire and flood. Any opportunity to ensure an adequate comeback for the SMEs even after major disasters should not be left of any dialogue or discussions as we observe this special day.
Daniel Boi Addo, MD for Hollard Insurance says, “To ensure the sustainability of the SME sector in the country, it’s crucial that we provide solutions that make them resilient in the event of any unexpected business shocks, sustaining the businesses and the people in them.”
“While financial solutions like Hollard Ghana’s Asomdwee MSME insurance have demonstrated strong initial adoption among SMEs, more still needs to be done to build true sector resilience, leveraging insurance,” he noted.
A significant number of enterprises still operate informally, limiting their access to government support programmes, financial services and digital tools. Asomdwee is designed to bridge this gap by providing business owners with customised insurance solutions that serve as a safety net, regardless of the size of their business. With three flexible options to choose from, business owners can select the cover that best suits their needs. The solution also eliminates the tedious paperwork associated with traditional insurance, making access simpler, faster and more inclusive, ensuring that no one is left behind.
Ghana’s broader economic prosperity is intrinsically tied to the viability of its MSMEs and their survival remains crucial to the sustainability of the economy, MSMEs are the primary engines of job creation, household stability and social and economic growth. Safeguarding their sustainability should, therefore, be a critical national imperative.
However, many business owners continue to operate without adequate financial protection against risks that could threaten their operations.
Ghana's insurance penetration rate remains at approximately 1% of GDP, significantly below the African average of 3% and the global average of 6%, highlighting the substantial protection gap that still exists across the economy and the overwhelming support that SMEs still need.
According to Hollard, increasing access to insurance solutions is an important step towards strengthening the resilience of small businesses and enabling greater economic participation. It also remains the single most important step to increasing the insurance penetration in Ghana given that they are responsible for about 70% of the country’s GDP.
Asomdwee MSME Insurance is designed to address some of the challenges faced by MSMEs. The product provides protection for business owners, employees and business assets against risks such as disability, critical illness, fire, burglary and liability claims, to help businesses recover from the unforeseen events that could otherwise place significant strain on their operations and sustainability.
Since its launch in 2021, Asomdwee has experienced encouraging growth and contributed to the sustainability of many MSMEs in the country.
Daniel argues that “risk mitigation solutions such as insurance act as a catalyst for enterprise growth. When small business owners operate with a guaranteed financial safety net, they can navigate market volatility and invest in expansion with greater confidence.
However, for many MSME owners, risk management remains one of the most overlooked aspects of running a business. While entrepreneurs often invest considerable time and resources into building their operations, protection against unexpected events is frequently delayed or deprioritised, particularly where financial resources are limited.
In view of that, it’s important that insurance should not be viewed simply as a financial product, it should be seen as an essential tool for business continuity, to help enterprises manage uncertainty and recover more effectively when unexpected events do occur.
As Ghana continues to pursue inclusive economic growth, creating an enabling environment for MSMEs will remain essential. Access to finance, skills development, technology adoption and supportive policy frameworks all play an important role in helping businesses succeed. Equally important is ensuring that entrepreneurs have access to practical tools to enable them to manage risk effectively.
Daniel argues that the case for insurance within the MSME sector is becoming increasingly compelling. “Entrepreneurs face a wide range of risks every day and while these risks cannot always be prevented, their financial impact can be managed. Access to appropriate insurance solutions helps ensure that unexpected setbacks do not become permanent obstacles to business growth," he noted.
As Ghana commemorates MSME Day, the contribution of small businesses to the country's development remains undeniable. Strengthening the sustainability of the sector will require collaboration between government, financial institutions, development partners and the private sector.