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The Role of SME’s in the Reconstruction and Development of the African Continent

SMEs, the engine of growth towards economic development.

Small and medium enterprises (SMEs) are independent businesses that employ up to 250 people (Hague P. & Woodburn S. 2006). SMEs are not limited to any particular type of industry or service, and it encompasses small and medium manufacturing facilities, small processing units, trading companies, export-import companies, distribution, retailing, rental, and service companies (Hari Srinivas, 2009). The SME sector serves as the engine for growth and development in the African continent.

In the early nineties, the African continent was tagged as an agrarian economy relying on agriculture but in this golden-age of business era, there have been a massive paradigm shift for nations within the continent have diversified their assets by venturing into the arena of investment within the SME sectors. The concurrent benefits that come with this step are incalculable. In Uganda, Small and Medium Enterprises (SMEs) employ more than 2.5m people, constitute up to 90 percent of the private sector and contribute over 70 per cent to total GDP(Oscar Ankunda, The Monitor 2010). Likewise in Ghana, 70% of all industrial establishments are in the Small and Medium Enterprises Sector and it is estimated that 85% of manufacturing employment and to a larger extent overall employment growth in the country comes from the Sector (Micro, Small and Medium Enterprises, MSME Ghana Project 2007).

Indeed the role and importance of the Small and Medium Scale Enterprise (SME) sector in the various economies within the African continent cannot be over-emphasized, but upon all these, there are challenges that are militating against the growth and development of these establishments. Challenges range from bureaucracy and red tapesm, lack of technolgical expertise, difficulty to find financing and skilled labour, just a mention of few.

Having a microscopic view over the immense benefits of SME’s to the African continent, what can you prescribe as a fellow scholar to help mitigate the challenges that militate against the progress of SME’s within the continent?



Modified 2010-07-23 16:07:13

References:

http://www.gdrc.org/sustbiz/what-are-smes.html
Micro, Small and Medium Enterprises, MSME Ghana Project 2007
Oscar Ankunda, The Monitor 2010

Research question: How can we mitigate the challenges that militate against the progress of SME’s within the continent?

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