The emergence of the novel COVID-19 virus pandemic has claimed over 4.5 million lives globally and nonetheless counting. In addition to the general public well being impression of the COVID-19 virus, it additionally severely impacted many economies internationally. As a consequence, many enterprise actions in lots of international locations have been disrupted. The impression of the virus has been extreme and widespread throughout corporations, with many enterprises dealing with various levels of losses (Apedo-Amah et al., 2020).
According to Shafi et al. (2020), it’s clear that corporations / enterprises worldwide are experiencing the numerous impression of the pandemic on their companies. Their findings reveal that small enterprises are much more severely affected by the pandemic in comparison with giant enterprises.
As most economies are popping out and recovering from the pandemic, many enterprises are additionally doing the identical. One of the important issues companies and enterprises want most on this present dispensation is capital or funding. Thus, elevating funds or capital on this period is exceptionally important for companies throughout the globe.
The international GDP progress price in 2020 fell by 3.3% on account of the coronavirus pandemic. Similar to the developed international locations, a lot of the enterprises in growing international locations are Small and Medium-Size enterprises (SMEs). These types of companies or enterprises are an integral a part of the worldwide financial system. They are the financial spine of most growing international locations; they’re the most important supply of employment and contribute considerably to progress.
As indicated by Shafi et al. (2020), small enterprises are extra severely affected by the detrimental impression of pandemic in comparison with giant enterprises. Because they represent a large proportion of the financial system, this immediately turns into the reason for the decline in progress of those economies.
According to Taneja et al. (2016), SME’s are sorts of enterprises which are extra versatile. They are likely to adapt themselves to the altering financial conditions, thereby permitting them to navigate by way of the financial downturns. Still, there have been extreme downturns.
Governments all around the world are reviving their economies and companies are following swimsuit, additionally reviving their operations. As a matter of reality, the restoration of economies globally can also be largely contingent on the restoration of companies or enterprises, particularly SMEs. One factor that’s important for companies and enterprises to revive their actions is funding. Funding is the lifeline of any enterprise, and elevating funding on this interval is essential for enterprise enterprises to increase their actions and translate into the financial system’s progress.
Prior to the COVID-19 crises, companies, particularly SMEs, these in growing international locations, discover it troublesome to finance themselves by way of retained earnings. Also, one of many predominant challenges hindering the expansion of many companies in growing economies has to do with having access to funds or credit score. The World Bank Enterprise Surveys of 119 growing international locations indicated that lack of entry to credit score is a serious impediment to enterprises, particularly start-ups.
Other research have additionally discovered entry to credit score to be a serious problem dealing with SMEs in growing international locations corresponding to Ghana over time (Abor & Biekpe, 2007; Mensah et al., 2019; Quartey et al., 2017). High value of borrowing, collateral requirement, restricted availability of long-term mortgage amenities, and restricted avenues of elevating credit score are among the elements chargeable for the challenges of elevating capital or credit score.
Moreover, submit the emergence of the pandemic, it much more troublesome for enterprise and enterprises to lift funds as a result of the pandemic hit the sources as nicely. There nonetheless have been avenues companies are utilizing to lift funding on this pandemic.
Bank loans or loans from financial savings and mortgage establishments are essentially the most extensively used supply of finance for companies in growing economies. Especially in Ghana, most SMEs need to depend on banks for financing. Likewise, most small companies additionally look to financial savings and mortgage establishments for his or her working capital.
The draw back to those sources of funding is that they arrive at a excessive value for companies. Moreover, these establishments have been additionally closely hit by the detrimental impression of the pandemic, thereby constraining their potential to offer out loans to firms. As a consequence, most of those enterprises are likely to direct their consideration to different alternate options to hunt funds to finance their ventures.
These alternate options embody authorities and donor grant and mortgage packages. Government businesses in developed and growing economies are offering funding within the type of grants to assist companies throughout this pandemic. For occasion, in Ghana, authorities Agencies such because the Microfinance and Small Loans Centre (MASLOC) and the National Board for Small-Scale Industries (NBSSI), and the Ghana Enterprises Agency (GEA) present assist to SMEs and start-ups, particularly on this pandemic period.
Some of those businesses provide loans amenities, and others give grants to native enterprises. The State has initiatives and packages such because the CAP Buss Program and Ghana Covid-19 Alleviation and Revitalization of Enterprises Support (CARES), Obaatan Pa to assist native enterprises and mitigate the pandemic’s impression on the financial system. Obtaining funds from these sources include some deserves and demerits.
Some of the benefits are that the serving to enterprise won’t need to be paid again funds which are given as a grant. Even within the case of mortgage amenities, the price of borrowing tends to be a lot decrease in comparison with borrowing from banks. Also, no a part of the enterprise is taken in return for the grant. Thus no management is taken over the enterprise. Nonetheless, the appliance course of will be very time-consuming with problems with pink tape and plenty of competitors is concerned in acquiring funds from these sources.
These sources of funding should not ample to satisfy the monetary wants of those enterprises. Therefore, companies must discover one other avenues to lift the funds they want for his or her operations. There are different avenues which are largely not explored by SME enterprises in growing international locations, which, if explored, will inure nice profit to the enterprises.
One of such avenues that SMEs in international locations like Ghana can use to lift funds is thru crowdfunding. Loads of enterprises within the developed international locations use this route to acquire funding. Crowdfunding platforms permit companies to lift funds from a number of small contributions from many particular person traders. An enterprise can both run an equity-based crowdfunding marketing campaign, the place fairness is exchanged for funding, or a reward-based crowdfunding marketing campaign, the place traders obtain rewards in alternate for his or her capital. There are platforms for crowdfunding that enterprises in growing international locations like Ghana can benefit from to lift funds.
Venture capital financing is one other nice route enterprises in Ghana can discover. Venture capitalists present funding in alternate for management of decision-making and a portion of the enterprises’ possession. Venture capitalists are chargeable for investing and rising among the world’s most progressive firms, together with Facebook, Uber, and Twitter. Venture capitalists are principally thinking about technology-driven companies and corporations with high-growth potential within the info know-how and communications sectors. Businesses that fall inside these areas can simply get funding from enterprise capitalists.
Ghana has the Venture Capital Trust Fund (VCTF), established by Venture Capital Trust Fund ACT, 2004 (ACT 680). The goal is to offer financing to Small and Medium Enterprises (SMEs). Although it’s comparatively very younger in Ghana, there are a selection of enterprise capital firms in Ghana from which companies can supply funding.
Start-ups may benefit from Business incubators and accelerator packages. These packages normally present start-ups with small investments in alternate for fairness, mentorship, and community entry to allow them to develop into sustainable and self-sufficient in the long run. This initiative additionally supplies entry to future traders upon the completion of the accelerator program. There are quite a lot of enterprise incubators and accelerator packages in Ghana.
A number of I do know in Accra are the Founder Institute Ghana, Stanbic Bank Incubator, MEST incubator, Orange Corners Ghana, Ghana Innovation Hub incubator, Innohub, TENGhana, Africa Skills Hub, Recycle Up Ghana, iSpace Foundation, Impact Hub Accra, Ghana Tech Lab, Footprints Africa and the Africa Digital Centre. In the northern components of Ghana, there’s the Northern Innovation Lab, HOPin Academy, NONI HUB, Dansyn Innovation Social Organization (Dansyn ISO), iValley Ghana, and extra. Other hubs embody Ashesi Venture Incubator, GhanaAssume, Ho Node Hub, Whizzy Academy, hapaSpace Innovation Hub, Kumasi Hive, Women’s Haven Africa, Chambers Market, Duapa Werkspace, and once more many many extra.
Raising funds as an SME within the pandemic period is rarely simple. It can also be not unimaginable. So the assistance is on the market. The growing quantity or enterprise hubs, accelerators, incubators and networking alternatives can flip your scenario round. You’d must analysis and execute a fund-raising technique that works greatest for you at growing your possibilities of success.
Have a pleasing week.
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REFERENCES
Abor, J., & Biekpe, N. (2007). Small enterprise reliance on financial institution financing in Ghana. Emerging Markets Finance and Trade, 43(4), 93–102.
Apedo-Amah, M. C., Avdiu, B., Cirera, X., Cruz, M., Davies, E., Grover, A., Iacovone, L., Kilinc, U., Medvedev, D., & Maduko, F. O. (2020). Unmasking the Impact of COVID-19 on Businesses.
Mensah, A. O., Fobih, N., & Adom, Y. A. (2019). Entrepreneurship growth and new enterprise start-ups: Challenges and prospects for Ghanaian entrepreneurs. African Research Review, 13(3), 27–41.
Quartey, P., Turkson, E., Abor, J. Y., & Iddrisu, A. M. (2017). Financing the expansion of SMEs in Africa: What are the contraints to SME financing inside ECOWAS? Review of Development Finance, 7(1), 18–28.
Shafi, M., Liu, J., & Ren, W. (2020). Impact of COVID-19 pandemic on micro, small, and medium-sized Enterprises working in Pakistan. Research in Globalization, 2, 100018.
Taneja, S., Pryor, M. G., & Hayek, M. (2016). Leaping innovation obstacles to small enterprise longevity. Journal of Business Strategy.
Abor, J., & Biekpe, N. (2007). Small enterprise reliance on financial institution financing in Ghana. Emerging Markets Finance and Trade, 43(4), 93–102.
Apedo-Amah, M. C., Avdiu, B., Cirera, X., Cruz, M., Davies, E., Grover, A., Iacovone, L., Kilinc, U., Medvedev, D., & Maduko, F. O. (2020). Unmasking the Impact of COVID-19 on Businesses.
Mensah, A. O., Fobih, N., & Adom, Y. A. (2019). Entrepreneurship growth and new enterprise start-ups: Challenges and prospects for Ghanaian entrepreneurs. African Research Review, 13(3), 27–41.
Quartey, P., Turkson, E., Abor, J. Y., & Iddrisu, A. M. (2017). Financing the expansion of SMEs in Africa: What are the contraints to SME financing inside ECOWAS? Review of Development Finance, 7(1), 18–28.
Shafi, M., Liu, J., & Ren, W. (2020). Impact of COVID-19 pandemic on micro, small, and medium-sized Enterprises working in Pakistan. Research in Globalization, 2, 100018.
Taneja, S., Pryor, M. G., & Hayek, M. (2016). Leaping innovation obstacles to small enterprise longevity. Journal of Business Strategy.
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Maxwell Ampong is the CEO of Maxwell Investments Group and a Senior Partner at BlackMore Investments, a commerce and company finance boutique agency. He can also be the Official Business Advisor to the biggest commerce union in Ghana, the General Agricultural Workers Union (GAWU) of TUC Ghana. He writes about trending and related financial matters, and basic perspective items.
LinkedIn:/in/thisisthemax Clubhouse:@thisisthemax Instagram:@thisisthemax Twitter:@thisisthemax Facebook:@thisisthemax Website: www.maxwellinvestmentsgroup.com Email:[email protected] Podcast: www.anchor.fm/einu Mobile: 0249993319
