Financial Management Practices by Small and Micro Enterprise Owners in Ghana - Evidence from the Central Region

Abstract

In recent times, small and micro enterprises have become topical in developing countries' efforts to re-invigorate their development and growth prospects with Ghana being no exception. Indeed, several scholars in this field continue to propose the 'right balance' required of a contemporary business in order that they take their rightful positions in engineering the socio-economic development and growth of their respective countries. This study rather looks at financial records keeping and business decision-making practices by small and micro enterprise owners (SMEOs) in Ghana with evidence from 20 districts in the Central region. Involving some gender highlights, 435 SMEOs were surveyed via a purposive sampling technique. Principally, the study reveals that majority of the surveyed businesses (50.3%) did not keep any financial record and the main reason assigned was their fear of exposing their businesses to regulatory authorities. SMEOs on their own kept inadequate relevant financial records. Relying on external assistance, 34.3% maintained adequately relevant financial records. Again, the respondents agree that decisions are crucial in businesses. However, 70% of them stated that due to sharp economic changes in Ghana, they could not rely on their financial records to make decisions. Also due to failed previous decisions, 17% had lost confidence in their decisions. The study recommends the direct involvement of the local authorities and private sector development institutions in assisting the SMEOs in crucial capacity building. Future research may look at the gender differences in these respects.