Unlocking the potential of small and growing businesses

5 September 2019

Sophia from Greater Accra started an event planning business after identifying a market gap for affordable hire equipment. She has now expanded into a thriving event planning service for weddings, funerals and more, with seven employees and additional casual labour during busy periods. She plans to build an event centre to cater to her local area and hopes one of her five children will one day take over her business.
Sophia received business coaching and finance to expand her event planning business – Credit: World Vision Canada

DFAT has funded World Vision and VisionFund to provide capital and coaching to small and growing businesses (SGBs) in Ghana and Myanmar and to demonstrate that SGB loans are sustainable and profitable. The program aims to de-risk this untapped market and encourage financial service providers and investors to enter it.

In developed economies, Micro, Small and Medium Enterprises (MSMEs) are the main engines of growth, innovation and productivity. They account for the majority of employment and collectively are the largest contributors to GDP.

In developing countries, however, poor access to finance remains the single biggest barrier to MSME growth, with an estimated US$5 trillion credit gap globally[1].

In Ghana, SMEs consistently rank access to credit among the two largest constraints to growth[2]. While Ghana has a well-developed banking sector, investment is predominantly concentrated in large enterprises and microfinance at the household level, leaving many SGBs without access to capital.

Banks and other credit institutions refuse SGBs as clients due to their perceived high risk-return profile and the transaction costs of serving small businesses. As a consequence the country is missing out on the opportunities for new jobs, national and regional trade, and economic growth that small business can generate.

Through the “Most Missing Middle” project, World Vision and VisionFund are providing much-needed credit to SGBs – particularly women-led enterprises, which face added challenges due to a lack of asset ownership and cultural and discriminatory barriers. The project also provides tailored one-on-one coaching to build entrepreneurs’ capacity to improve business practices and grow.

By demonstrating a replicable business model for providing SGBs with the financial and non-financial services they need to grow, the project will show that SGB loans are sustainable and profitable. This will encourage other financial service providers and investors to enter this untapped market.

Enabling SGBs to expand and increase their efficiency and productivity helps them connect to local, national and, ultimately, international markets, deepening the trade capacity of developing countries. World Vision Australia recognises trade as a critical pathway to achieving inclusive economic growth and poverty reduction.

The project provided over AUD $450,000 in loans to 91 Ghanaian entrepreneurs within the first year of implementation. This was nearly double the target, demonstrating the demand for increased credit – particularly for working capital.

The SGB clients span industries such as retail trade, small-scale manufacturing, hospitality and agriculture, across Ghana’s Greater Accra, Western, Central and Ashanti regions. Over half (52 per cent) are women. Importantly, each SGB client is creating employment in their local area, with an average of two permanent staff in addition to casual labour and increased demand within their supply chains.

Over the next two years, World Vision and VisionFund will support the growth of over 200 small businesses across Ghana, leveraging capital from commercial and impact investors to generate greater impact.

[1] International Finance Corporation. 2017. MSME Finance Gap: Assessment of the Shortfalls and Opportunities in Financing Micro, Small, and Medium Enterprises in Emerging Markets.

[2] World Vision Canada, 2016. The Landscape for SME Financing in Ghana: Market Research Report. April 2016.

Last Updated: 2 September 2019