RENT REGIME FOR SMALL-SCALE BUSINESSES: THE DREAM KILLER

Over the years and rather increasingly, people have been advised to take up entrepreneurship as an alternative source of employment. This is primarily as a result of the unavailability of jobs. Also with the rapid increase in population accompanied by widening markets, there has been an increase in demand for goods and services. The existing structures are therefore unable to meet the increasing demands and hence loop-holes in the system. In schools, as part of the educational reform programmes, students have been taught to be self-reliant and to take a more practical approach to whatever knowledge they acquire. Consequently, entrepreneurial programmes have been introduced as part of the course work for students especially in our tertiary institutions to enable them create employment for themselves after school. Even in the non-formal environment, entrepreneurial ventures are at the maximum in the areas of food production, livestock rearing, trading, among others.

Entrepreneurship is therefore increasingly becoming a great source of employment for many individuals especially of the younger generations. This is a lucrative endeavour. Currently in Ghana, entrepreneurship in the area of small-scale businesses accounts for a larger proportion of the nation’s economy in the form of taxes. Although people have ventured into this field of employment creation, there are however scores of challenges that is hampering the growth of most small-scale businesses in Ghana. For these reasons, most people prefer not to go through all that trouble. Although people, both home and abroad, have been encouraged to go into entrepreneurship as a mode of job creation, a few have been able to make their marks. Several young businesses, over the years, have closed down. Various reasons account for these failures.

In Ghana, there are no clear policies governing the operation of small businesses and so it becomes a battle between the informal and formal sector for survival. Most small-scale businesses become targets for revenue, usually attracting a lot as tax. In the end, this affects the capital foundation of these businesses since the profit margin becomes really thin and in most cases, it becomes a loss.

Starting any business involves some form of capital investment. For most young businesses, which are just making their first entry into the Ghanaian market however, the cost of operation is usually unfriendly or unbearable. Duties paid on imports by most young businesses do not make it profitable since there is no tax-exemption for these young businesses. There are several young businesses in the country that hardly make any earnings or income but are being forced to cough up monies as income taxes at the end of the day. How does one pay income tax if there is no income? We pay income taxes on our income. In the case that a business makes no income, where does that money come from? The money being invested in the form of capital? Are we being fair to the ordinary citizen? Are we being realistic?

Over the years, several agencies including the Association of Ghana industries (AGI) and the private sector, have called for tax-exemption for a minimum number of years for small-scale businesses during which time they can develop to their full term until such time that they can comfortably pay their taxes but this has fallen on deaf ears. The small-scale businesses continue to suffer!

The cost of infrastructure and supplies is also increasingly becoming a saddle for most small-scale businesses in Ghana today especially in the major cities. For the well-structured and more formal environments who realize enough profits at the end of each day, the issue of property tax is no headache. However, for the small-scale or young businesses who cannot afford their own premises, this is another setback. The monies being paid as rent on structures housing small-scale businesses is overwhelming. Ultimately, this goes to increase the costs of operation and hence, no profit is realised at the end of the day. Can any business grow under such conditions?

What most people fail to realise is that, when it comes to small-scale businesses, there is always the difficulty in accessing money as capital especially if being started by an individual. Most young businesses have no access to or usually find it difficult in accessing loans or credit from banks. Access to our local markets is also a huge problem in the sense that most people in Ghana prefer foreign goods compared to those produced locally. The low patronage is also attributed to the lack of support by the government in the form of access to loans or grants, tax exemption for young businesses, proper legislation concerning the operation and promotion of young or small-scale businesses especially by local entrepreneurs. How then can a young business survive? Even in the area of governance, the same trend exists. Most of the major contracts are continually being issued to international markets. What becomes of our local businesses? Oh Ghana, awake!

Considering the hell most young businesses go through in Ghana, could it perhaps be a plot to cripple the young businesses who serve as competition for the well-structured and more organized institutions? Is it a ploy to kill the entrepreneurial spirits of citizens?

What most people fail to recognize is the fact that small-scale businesses form the backbone of the nation’s development since a greater proportion of the citizens in the nation fall under this sector of the economy particularly in the areas of petty trading, among others. Small businesses ultimately become competitions for large firms. This is because small businesses have wider markets, are less formal and so reach a larger populace of varied economic classification. Most entrepreneurs and small businesses seek to provide more alternatives based on what exist on the market.

Entrepreneurship is all about creativity and innovation and so entrepreneurs need to be encouraged. It is high time the government draws up policies that would encourage the growth of small-scale businesses, and most importantly, entrepreneurs. There should be clear rules governing the amount being paid as taxes on income, raw materials, property and several others. Our financial institutions should be more charitable and tolerant to small-scale businesses by providing them with easy access to loans and other credit facilities.

We often talk about teaching a person to fish rather than providing the fish (spoon-feeding). Are we being real? Are we being truthful to ourselves? If we keep crippling small-scale industries in Ghana, we might as well prepare for the consequences. We should then brace ourselves for perpetual spoon-feeding!