The Catalyst Of Economic Growth A look at ILO contribution to SMEs’ development

Small and Medium Enterprises (SMEs) play an important role in the economic development of any country.

It is no surprise that developed countries enjoying a growing and booming economies attribute most of their achievements to a flourishing SME sector.

The potential of SMEs to promote domestic-driven growth of new and existing industries and to strengthen the resilience of the economy in a competitive and challenging environment is inarguable.

According to the Department of statistics of Malaysia, the economic growth in developed countries such as Korea, Japan, Taiwan and many others, was significantly generated by SME activities.

The potential of SMEs to promote domestic-led growth in new and existing industries and to strengthen the resilience of an economy in a competitive and challenging environment is not arguable.

This shows that small and medium enterprises have been the backbone of economic growth and driving industrial development. Due to their sheer numbers, size and nature of operations, the role of SMEs in promoting endogenous sources of growth and strengthening the infrastructure for accelerated economic expansion and development has been recognized.

SMEs In Ghana
The National Board for Small Scale Industries (NBSSI) which is the regulatory body for SMEs in Ghana, defines SMEs in terms of both fixed asset and number of employees  as an enterprise with turnover greater than US$200,000 and not more than US$5 million equivalent.

The SME market constitutes the vast majority of businesses in Ghana and over the years has evolved to become the key supplier and service provider to large corporations, inclusive of multinational and transnational corporations, says Dr. Tweneboah Senzu, Managing Director of Bastiat Ghana, a liberal economic think-tank.

He says principally, SMEs have contributed to expanding output, providing value-added activities in the manufacturing sector and creating employment opportunities, especially in the services sector.

Dr. Senzu, citing a recent study conducted by the think-tank said 92 per cent of companies registered in Ghana are micro, small and medium scale enterprises (SMEs).

According to the study, 85 per cent of the SMEs offer employment in the manufacturing sector. Also, 75 per cent of them contribute to the Gross Domestic Product (GDP) of the country.

Obstacles
Among the bigger obstacles to SMEs in Ghana is access to funding and ability to conduct market research to support their operations as a guide to work scientifically for the success of their ventures.

“The market landscape is very dynamic, fast-paced and evolving functions of numerous challenges and opportunities which the support of only quality market research will make a venture have a bright future with investors confident to invest,” he observes.

Due to the  challenges which include inefficiency due to poor work place corporation, lack of quality management, poor human resource management and occupational safety and health, most SMEs do not perform to their capacities, with others folding up as a result of frustrations in dealing with the challenges they encounter.

ILO Score
It is in the light of this that the International Labour Organization (ILO), with funding from the Swiss State Secretariat of Economic Affairs (SECO) and Norwegian Agency for Development Corporation (NORAD), has been implementing the Sustainable Competitive and Responsible Enterprise (SCORE) in Ghana for the past six years.

SCORE is an ILO training programme to improve productivity and work conditions in SMEs that have the potential for growth through better workplace cooperation.

It is a global programme, currently operating in 12 emerging economies in manufacturing and other economic sectors.

The SCORE curriculum comprises five modules: workplace cooperation, quality management, cleaner production, human resource management and occupational safety and health. Ghana is currently implementing the SCORE phase II after successfully implementing the first phase.

Mr. Kwamina Amoasi-Andoh, SCORE Country leader, says the objective of the programme in general is that SMEs are more sustainable through being cleaner, more productive and competitive and provide more sustainable and decent employment.

He adds  that to achieve this, the project, which is in its second phase because of the success chalked in the first phase, is expected to help industry associations to market and coordinate enterprise upgrading services to their local members, among others.

Service providers can effectively deliver training and advisory services for workplace upgrading on a commercially sustainable basis.

Labour inspectorate services work with the mass media to disseminate progressive workplace practices. Each module is delivered in two-day classroom workshop which is followed by site visits.

According to Mr. Amoasi-Andoh, the programme has the capacity to train about 40 enterprises by the end of the year.

SCORE II Achievements
The SCORE Country leader says Ghana has done very well in the implementation of the SCORE II project, indicating that the programme has expanded to other regions with the training of 12 additional trainers, with eight being certified by the ILO.

“We have trained 125 enterprises in the manufacturing sector, developed efficient trainers (18) with 72 per cent of enterprises undergoing modules two to five. We have had a positive change in attitude for workers and management and have mainstreamed gender in all aspects of the programme,” he claims.

Sharing the results from data gathered from the enterprises that have undergone SCORE training, Mr. Amoasi-Andoh notes that there has been a high financial saving in six months from $3,000 to $41,000 with defects reduction of 11 to 38 per cent.

“There has been efficiency in raw material usage through waste reduction of 15 to 45 per cent, increase in employment (25 per cent in 2013 and 18 per cent in 2015),” he states.

He further adds that Ghana is already training and certifying trainers, using its own mater trainers who will be retrained.

Implementing SCORE III
Mr. Amoasi-Andoh says despite the great success of SCORE phase II, the programme still has some challenges it is working to overcome.

He notes that the country needs to look for ways to finance SCORE module I, which is free. According to him, government is also yet to fulfill its part of the agreement to fund the module I of the SCORE programme.

“We have been to the ministry of finance and they advised that the then ministry of employment and labour relations should add the amount they were supposed to support SCORE with to their budget so that we can receive our money; but it was not added so we did not get our allocation as promised,” he assets and adds, “We are however, hopeful that with the new government our allocation will be in the next budget.”

He says that notwithstanding the gains made, the country has the nod to continue the programme to its third phase which looks at the country working to achieve financial, technical institutional and market sustainability.

He said the first step in the implementation process is to increase the presence of SCORE to SMEs. Although the programme advertises and calls for application, the feedback it receives is lower than expected. “The highest number of SMEs applying for a module is 11, the rest we have to identify them, go and make a presentation and convince them to sign up,” he discloses.

Mr. Amoasi-Andoh states that the programme had developed an SME show on TV to educate more SMEs on its benefits. “The SMEs need to apply to train and know that SCORE can help them,” he urged.

The programme, he maintains, has already identified lead buyers, multi-nationals who buy products from SMEs in their value chain and advise them (SMEs) to go for the ILO SCORE training.

“We will develop the strategy to work with lead buyers in SCORE II as part of the sustainability agenda; the project will develop the process and the workable approach to enable ILO and the partners to work with MNEs and large enterprises for their mutual benefits,” he points out.

Thus, with the work ILO SCORE Project is implementing in the country, Mr. Amoasi-Andoh believes, the country can develop a sustainability strategy with the government and its social partners to ensure that the exit of ILO SCORE Office from the country will not kill the programme.

By Jamila Akweley Okertchiri