By Laudia Anyorkor Nunoo, GNA
Tema, Aug. 12, GNA – Ghanaian micro, small and medium enterprises (MSMEs) spend up to 30 per cent of their capital or profits on regulatory compliance, the Institute for Liberty and Policy Innovation (ILAPI) research has estimated.
The institute said the expenditure reduced the resources available to businesses for production, expansion, and employment.
Mr Peter Bismark Kwofie, the Executive Director of ILAPI, said during a press conference that the problem went beyond the commonly cited challenge of access to finance because a substantial portion of funds secured by businesses could subsequently be absorbed by compliance requirements.
Mr Kwofie said interviews conducted during the study showed that some businesses believed that even after obtaining capital, as much as 30 per cent could eventually be spent on regulatory requirements.
“If you get this money, 30 per cent of this money will eventually be used for your regulation,” he said.
He added that this meant that businesses could remain constrained even after receiving loans or investment capital.
The ILAPI executive director stated that money spent on regulatory compliance did not directly contribute to the productive activities of the business but was required to meet government standards and requirements.
The research’s compliance chart showed that respondents reported different proportions of capital spent on regulatory compliance, including a group reporting expenditure of between 26 and 30 per cent.
ILAPI said the burden was particularly significant for small businesses with limited working capital.
It argued that reducing unnecessary compliance costs would allow businesses to channel more resources into machinery, stock, production, and human resources.
The institute therefore recommended the harmonisation of licences and certifications, joint inspections, and a unified digital registration platform to reduce duplication and administrative costs.
GNA
Edited by Linda Asante Agyei
Reporter: Laudia Anyorkor Nunoo, GNA
[email protected]