Furthermore, management skills are weak, thus inhibiting the development of a strategic plan for sustainable growth.
Kayanula and Quartey in addition note that SME competitiveness in Ghana is mainly constrained by the following factors: 1.
As indicated by OECD 2002, SMEs fast-changing technologies and globalising economies are putting increased pressures on firms to reorganise their structures to enhance adaptability and flexibility.
Upgrading the skills of all types of employees is hence central to firm performance in SMEs which must be able to adapt quickly to evolving markets and changing circumstances, but which often have limited resources.
Hence, definitions which employ measures of size (number of employees, turnover, profitability, net worth, etc.) when applied to one sector could lead to all firms being classified as small, while the same size definition when applied to a different sector could lead to a different result.
Kayanula and Quartey in their research however identified a number of common definitions used when referring to SMEs in Ghana that could be used for purposes of this essay.They also improve the efficiency of domestic markets and make productive use of scarce resources and thus facilitating long term economic growth.1.3 Challenges facing SME Growth and Competitiveness in Ghana Despite the wide-ranging economic reforms instituted in the country to promote SME development, SMEs in Ghana still face a variety of constraints (UNECA 2010, Kayanula and Quartey 2000).Indeed there is preliminary evidence that competence development activities can reduce the failure rates of small firms, which are far more likely to fail than larger firms, particularly in the early years (OECD 2002).1.2 SMEs in Ghana: Definition and Role towards Economic Development As per statistics from the United Nations Economic Commission for Africa 2010, Ghana’s GDP grew at an annual rate of 5.4 per cent between 20.The former can be sub-divided into `organised’ and `unorganised’ enterprises.The organised ones tend to have paid employees with a registered office whereas the unorganised category is mainly made up of artisans who work in open spaces, temporary wooden structures, or at home and employ little or in some cases no salaried workers. Rural enterprises are largely made up of family groups, individual artisans, women engaged in food production from local crops.The major activities within this sector include:- soap and detergents, fabrics, clothing and tailoring, textile and leather, village blacksmiths, tin-smithing, ceramics, timber and mining, bricks and cement, beverages, food processing, bakeries, wood furniture, electronic assembly, agro processing, chemical based products and mechanics (UNECA 2010, Kayanula and Quartey 2000).Among their many roles, SMEs in Ghana have been crucial in mobilising funds which otherwise would have been idle (Kayanula and Quartey 2000).From these definitions however, it would be prudent for purposes of this essay to note that the process of valuing fixed assets in itself poses a problem as continuous depreciation in the exchange rate often makes such definitions out-dated.It is further noted that SMEs in Ghana can be categorised into urban and rural enterprises.