09.07.2004 Business & Finance

Bigger companies to sub-contract business from local SMEs

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Accra, July 9, GNA- Government would soon launch a new project that would enable large-scale industries and companies to sub-contract production undertakings to Small and Medium Enterprises (SMEs).

The project, dubbed "Sub-Contracting and Partnership Exchange (SPX)", seeks to create and promote strong and effective linkages between bigger companies and smaller ones in the production process to encourage outsourcing as a way of stimulating industrial growth. Mr Alan Kyeremanten, Minister of Trade, Industry and President's Special Initiative (PSIs), who announced this on Friday said at present the Ministry had developed a data base for over 200 local SMEs whose production qualities and capacities would be upgraded and enhanced to meet ISO specifications.

This, he said, would enable such SMEs to identify and meet not just the non-core needs of the large-scale companies but also the core aspects of their production activities.

The Minister was addressing Chief Executive Officers of companies and industries at a day's sensitisation programme to have their views and inputs into the project and also as way of encouraging bigger companies to the economic importance and advantages of outsourcing. "Our bigger industries need to also realise and appreciate the fact that some of our local companies do have the capacities to even produce and manufacture better components of their core needs", he said.

Mr Paul Victor Obeng, a Consultant to government on the project, gave an overview of the concept of sub-contracting, its economic implications to businesses and drew lessons from developed countries. He said none of the bigger companies made it without resorting to sub-contracting of their businesses.

Mr Obeng said for the purposes of production security, effectiveness, and market expectations, large companies of the developed world did not manufacture or produce all their business component needs by themselves but rather relied at times heavily on what were produced by other third parties.

He noted that in order to promote outsourcing in the country, SMEs would be faced with major challenges such as the quality, price and reliability of their products or items.

"As we look forward for the implementation of the project, it is important that SMEs do not allow their innate fear of the large-scale companies to deny them of their opportunities to grow and expand their businesses.

"SMEs should be willing to adjust and adapt to new situations and have the courage to accept news ways of looking at their businesses", he said. 9 July 04

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