Unlocking Growth: The Need for Innovative Financing Schemes for Micro, Small and Medium-sized Enterprises in Ghana

By Gaeten Akanwarisage Agbaam and Edem Attor    

Accra, June 27, GNA – Micro, Small and Medium-sized Enterprises (MSMEs) account for 95% of all registered businesses in African countries and contribute an estimated 50% to the Gross Domestic Product of African economies. 

From generating employment for about 90% of the African population, and significant revenue for these African economies, MSMEs serve as one of the key backbones of reducing poverty levels across the continent.   

Despite the immense contributions of MSMEs to the Ghanaian and African economies, the fundamental issue to MSMEs remains access to adequate finance.    

Furthermore, businesses under the MSME category are also susceptible to shocks such as global recessions, pandemics, and economic turndowns.  

The challenges MSMEs face range from stiff competition from multinational companies to low levels of access to financial capital to expand their MSME activities.    

This leads to diminished productivity, compromised quality, and in some cases, business closures. This has led to a great gap in the MSME sector and innovative financing schemes are therefore essential to address the current gaps and barriers and foster a more conducive environment for businesses to thrive.   

In addition, innovative financing schemes are necessary to MSMEs because they:  

a. Improve the access to capital, 

b. Create more avenues for financial inclusion,  

c. Support innovation and entrepreneurship (especially as we enter the 4th industrial revolution)  

In relation to this, the digital economy and limited access to digital markets and e-commerce platforms can also be said to be a challenge. Many MSMEs struggle to access digital marketplaces and e-commerce platforms where they can sell their products or services. This limitation is often due to barriers such as high transaction costs, lack of awareness about available platforms, and difficulties in meeting the technical requirements for online selling.   

Without access to digital markets, MSMEs miss out on opportunities to reach broader customer bases and expand their businesses online. To overcome the challenges associated with financing for MSMEs across Ghana and African countries, and in light of agreements such as the African Continental Free Trade Area (AfCFTA), various innovative financing schemes and techniques are being developed by experts in the field of finance to assist MSMEs in overcoming the challenges associated with capital accumulation for business expansion strategies.   

Some innovative financing schemes are:   

1. Partnership Building   

One of the most recommended innovative financing schemes for MSMEs in Ghana is through the formation of partnerships with banks, financial institutions, and other multinational companies . UNDP Ghana in partnership with ABSA has been delivering such integrated partnership support to MSMEs especially youth and women-led businesses to build their resilience and sustain inclusive development efforts. On the side of partnering with relatively bigger and well-resourced companies, this ensures that the MSMEs are protected from absolving all the debts in times of economic recessions and economic shocks in the environment these MSMEs operate.   

2. Crowdfunding Approach   

Another innovative alternative financing scheme for MSMEs is through crowdfunding. The concept of crowdfunding for MSMEs involves the ability of the MSMEs to display their business ideas online using various online platforms towards fundraising.  Soliciting from social media platforms such as Facebook, WhatsApp Business, and Instagram ensure enough capital for business expansion purposes and enables start-ups to validate their proof-of-concept through a reality check with a huge audience of individuals.   

A successful crowdfunding campaign provides strong market validation, while failure imparts feedbacks and insights that are also beneficial to the business. It also creates financial leverage with other forms of financing, since a successful crowdfunding campaign helps to strengthen the company’s financial structure (e. g. in the case of equity crowdfunding) and high-lights that there is a potential market for its business. These are useful arguments to convince banks, Venture capital and angel investors when seeking additional funds. Look at it this way,  donating money can help buy a blanket for one person in need, however,  crowdfunding a small business can help it to produce affordable blankets for hundreds of people in need. This method can contribute to building a whole ecosystem of supporters and ambassadors, serving as a powerful leapfrog.   

3. Cooperative Groups/Association Financing   

Cooperative societies where members contribute significant amounts to be given out to members needing finance for business expansion and emergency situations is another innovative financial solution. This avenue remains one of the most innovative avenues due to the low-interest rates associated with the financing options for businesses as well as their flexible payment terms. The flexible term payments such as weekly payment options are usually associated with technical support that ensures that members’ contributions are received on a weekly basis to reduce the burden of debt accumulation.    

4. Impact Investing Funds  

Impact investing firms are funds that support specifically social or environmental outcomes in addition to generating for profit income. Funding from such firms towards MSMEs can promote long terms sustainable and greener businesses. These funds can therefore channel capital into MSMEs that are tackling pressing social and environmental issues towards longevity and sustainability.   


The existence of MSMEs in Ghanaian and African economies cannot be ignored due to their significant contribution to the Gross Domestic Product (GDP) growth of various economies.  For the Ghanaian Economy alone, the major challenge which is usually capital constraint has become an old age problem towards MSME growth and expansion. Alternative innovative financing schemes such as cooperative business financing strategies and crowdfunding for MSMEs have been identified as some of the lowest interest-bearing financing schemes for MSME growth and resilience.   

Utilizing such alternative financing schemes is crucial for accelerating the growth of MSMEs in Ghana and across the continent within the AfCFTA. This is also dependent on collaborative efforts from both the private and public sectors, which will in the long run, bolster economic integration and facilitate the transformation of Africa’s economic terrain thereby contributing towards sustainable development.   


The Authors Gaeten Akanwarisage Agbaam and Edem Attor are MSMEs Financing Specialist and  MSMEs Specialist respectively.