Funding Self-Employed Businesses in Ghana: The Short and the Long Run Models

Abstract

Unemployment has been a problem for both developed and developing countries and efforts are made by governments to find solution to the problem. In Ghana for example, the following measures have been taken by previous governments to tackle the situation in their attempts to solve it. First, the workers brigade was set up by Dr Nkrumah in the 1960s to employ some of the teeming youth who were unemployed. The Youth Employment Scheme started by the Kuffour regime was continued by the Mill's and Mahama' s administrations between 2009 and 2016 and currently the Nana Addoh's regime (2017) have tried to create employment opportunities for the unemployed in the Ghanaian society. All these governments advocate for private sector participation in the employment sector to help solve the unemployment situation in Ghana. Many of such businesses are found in the informal sector and throughout the decades, instead of the informal sector disappearing as the modern economy expands, the informal sector has actually grown in the rural and urban areas of Ghana. The size of Ghana's informal sector is placed at 80 per cent of the total labour force. The large-scale retrenchment of labour as overriding consequences of Structural Adjustment Programme in Ghana in the mid-1980s, coupled with the inability of the government to provide employment for the emerging labour force has created a large pool of unemployed persons who have naturally gravitated towards the informal sector. According to studies the size of the informal sector employment in the 1980s was twice that of the formal sector. By the 1990s, the informal sector employment had increased by five and half (5½) times than that of the formal sector. One of the teething problems which is a thorn in the fresh of the informal sector is funding which most researchers agree but how do the self-employed overcome this social canker? Both short and long run models for raising self-funding of businesses have been provided in this study to help the self-employed tackle their financial problems. It is hoped that if prospective self-employed owners/managers go by the tenets of the models the financial constraints of the self-employed could be reduced if not eradicated.