News Guide Africa

Tag: SMEs

  • VAT Reforms: traders clash with gov’t over unfair system

    VAT Reforms: traders clash with gov’t over unfair system

    Ghana’s Value Added Tax (VAT) reforms have sparked intense debate, with the Ghana Union of Traders’ Associations (GUTA) warning of devastating consequences for small and medium enterprises (SMEs).

    But the government and Deloitte see it as a welcome move to ease tax burdens and stimulate investment. The sudden shift from a 4% flat rate to a 20% VAT has raised concerns about market distortion, with GUTA arguing that it will create an uneven playing field for traders.

    The new threshold of GH¢750,000 is expected to segregate traders, with those above the threshold charging 20% VAT and those below charging nothing. This, GUTA warns, will lead to higher prices for consumers and loss of business for affected traders. The Union is calling for a modified tax system that ensures parity and promotes compliance. In a statement issued last week, GUTA’s First Deputy Secretary General, Richard Amamoo, said the Union is observing “with grave concern” the challenges that will emerge from the new regime.

    “Two traders dealing in the same products in the same market will now be treated differently,” Amamoo explained. “One will charge 20% VAT because their turnover crosses the threshold, while the other, with lower turnover, will charge nothing.”

    GUTA fears that customers will simply go to the trader without VAT, leaving the other at a huge disadvantage. The Union is calling for a modified tax system that ensures parity, promoting compliance and reducing the risk of non-compliance fueled by pressure and imbalance.

    He said GUTA “acknowledges and welcomes measures aimed at enhancing tax compliance and improving revenue collection,” but stressed that the reforms come with serious unintended consequences.

    On the other hand, Deloitte believes the VAT reforms will reduce the effective VAT rate, easing the tax burden on businesses and stimulating investment. The government aims to simplify VAT administration, strengthen compliance, reduce the tax burden on businesses, and support job creation.

    The professional services firm, in its analysis of the 2026 National Budget stated that it will closely monitor the implementation of the 24-Hour Economy initiative and the Accelerated Export Development Programme, which collectively aim to unlock productivity, expand export capacity, and drive inclusive growth.

    “For the business community and consumers, the proposed reform to the Value Added Tax (VAT) regime is welcome news. Implementation of the reforms is expected to reduce the effective VAT rate to 20% from 21.9%. These reforms are expected to ease the tax burden on businesses, stimulate investment, and support job creation”.

    The Minister for Finance, Dr. Cassiel Ato Forson, who presented the 2026 Budget Statement and Economic Policy of the Government of Ghana for the next financial year to Parliament, outlined the government’s agenda to transition from stabilisation to transformation.

    Key policy measures announced include further strengthening of domestic revenue mobilisation, continued rationalisation of public expenditure, and a renewed commitment to fiscal discipline.

    The Ghana Revenue Authority (GRA) is pushing for a January 1, 2026, rollout, pending parliamentary approval. With technical and operational mechanisms in place, the GRA is confident in a smooth transition.

    Commissioner-General Anthony Sarpong, speaking at the PwC Post-Budget Forum in Accra, said the Authority is “fully prepared” to roll out the changes at the beginning of the new year”. indicating that, early approval is crucial to ensuring a smooth transition into the new system, which aims to simplify VAT administration, strengthen compliance, and reduce the tax burden on businesses.

    He explained that Parliament has already commenced deliberations on the VAT Amendment Bill, and the GRA is hopeful that lawmakers will give the green light before Christmas.

    “We are expecting Parliamentary approval before Christmas, and once that is secured, we are ready for January 1 [2026],” he said.

    He added that the GRA has been engaging the Ministry of Finance and other stakeholders to ensure that the full set of reforms, ranging from adjustments to the VAT structure to enhanced digital invoicing systems, can be implemented without delays.

    The Commissioner-General also stressed the importance of public sensitisation and said the GRA will intensify education campaigns immediately after Parliament gives approval.

    He said this is necessary to ensure that taxpayers understand the new rules, especially the changes to invoicing, compliance timelines, and the responsibilities of VAT-registered businesses, while he assured industry players that the GRA will maintain open dialogue throughout the rollout period, promising prompt responses to concerns that may arise once the reforms take effect.

    “Our goal is to make the transition as seamless as possible for both businesses and consumers,” he added.

    The VAT reforms are part of Ghana’s broader strategy to modernize the tax system, improve revenue mobilization, and support economic recovery. While there are concerns, the government is committed to making the transition as seamless as possible for businesses and consumers.

    However, questions remain about the impact on SMEs and the economy. Will the VAT reforms cripple SMEs, or will they provide a much-needed boost to Ghana’s economic growth? The answer lies in the government’s ability to balance revenue mobilization with business-friendly policies.

    As the debate continues, stakeholders are urging the government to consider the potential consequences and ensure a fair and equitable tax system. The success of the VAT reforms hinges on effective implementation and ongoing dialogue with businesses and traders.

     

    By Adnan Adams Mohammed

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

  • Financial Habits Every SME Must Adopt: The 7-Point Check List

    Financial Habits Every SME Must Adopt: The 7-Point Check List

    Running a small business is demanding. Each day presents challenges that can affect your cash flow, your customers, and your ability to grow. Amid these demands, it is easy to lose sight of long-term financial priorities.

    However, businesses that last are not only those with good products or strong customer service. They are often the ones with better financial habits.

    This article outlines seven essential points that will help SMEs manage their finances more effectively, reduce risk, and plan for growth.

    1. Start with a Clear Financial Plan

    A good financial plan gives direction to your business. It helps you set targets, allocate resources, and make informed decisions.

    Start by defining your financial goals. These should be SMART – specific, measurable, actionable, realistic, and tied to timelines. For example, you should determine how much revenue you need each month, what level of production or service delivery is required to meet that target, and how you intend to achieve it.

    Once your targets are clear, you will need a working budget. A good budget helps you monitor income and expenses, manage cash flow, and ensure that your business remains on track. It also provides a basis for deciding what to prioritise and what to postpone.

    At its best, your financial plan should help you answer key operational questions such as what resources are required to operate or grow, where those resources will come from, what they will cost, and whether your business is in a position to take them on.

    Planning in this way reduces uncertainty and allows you to run your business with greater clarity and confidence.

    2. Maintain Accurate Financial Records

    Accurate financial records are essential for any business. Whether you are managing day-to-day operations, planning for future growth, or applying for funding, clear and reliable financial information allows you to make sound decisions.

    Many small businesses struggle in this area due to time constraints, limited expertise, or a lack of systems. However, proper record-keeping should never be overlooked. It supports internal decision-making, strengthens external credibility, and improves your ability to respond to opportunities or risks.

    Business owners can start by gaining basic knowledge of accounting principles and tools. Training employees in simple record-keeping practices also helps to build internal capacity. In some cases, it may be worthwhile to engage professionals who can help you put the right systems in place and prepare essential reports at a cost that makes sense for your business.

    3. Choose a Banking Partner Aligned with Your Goals

    The right banking relationship can make a real difference to your business. A bank like Absa Bank is more than a place to keep your funds. It is a partner that can support your operations, guide your financial planning, and help you take advantage of growth opportunities.

    Begin by understanding your business needs. These might include working capital support, payments and collections services, or trade finance. Once your needs are clear, assess whether your bank offers the right mix of services, accessibility, and expertise.

    Your banking partner should make it easier to run your business, not harder. They should share your ambition to grow, be responsive to your concerns, and provide solutions that are tailored to the stage your business is in. A strong banking relationship will give you confidence and peace of mind as you build your enterprise.

    4. Deploy Effective Payment Solutions

    Revenue is the foundation of every business and the way you go about collecting it is key. In today’s economy, customers expect fast, simple, and secure payment options. If your business only accepts cash, you may be turning away potential sales without realising it. Providing customers with flexible payment options is no longer a luxury. It is a necessity for growth and long-term relevance in a digital economy.

    Offer customers alternatives such as instant bank transfers, mobile money, card payments through point-of-sale devices, or more innovative solutions like Absa Mobi Tap to improve your customer experience and increase your reach. These methods reduce delays, enhance transaction security, and demonstrate professionalism.

    5. Meet Statutory Obligations Promptly

    Every business has legal and regulatory responsibilities. These include filing and paying taxes, submitting Social Security and National Insurance Trust contributions, and meeting other sector-specific requirements.

    Complying with these obligations on time helps you avoid penalties and disruptions. It also builds your business’s reputation and improves your standing with financial institutions and regulators.

    To stay compliant, you should adopt a legal structure that suits your business model and goals. You may also wish to seek legal or tax advice at key points in your journey. Planning ahead for obligations such as annual tax payments or quarterly filings ensures that you are not caught off guard.

    Meeting your statutory responsibilities consistently is a mark of a well-run business.

    6. Manage Your Risks

    Running any business involves risk. These risks may include delayed payments from customers, unexpected costs, economic downturns, or even natural disasters. For small businesses operating with limited resources, such events can be difficult to absorb.

    This is why risk management must be part of your financial routine. Start by identifying the main risks that could affect your business. Put in place basic measures to protect your operations. This could mean setting aside emergency reserves, purchasing insurance, or diversifying your income streams.

    Being proactive about risk does not eliminate uncertainty, but it helps you stay in control when challenges arise. It also signals to lenders, partners, and customers that your business is prepared and resilient.

    7. Separate Business and Personal Finances

    It may be tempting to treat your business account as your personal wallet, especially in the early stages. However, failing to separate your business and personal finances can lead to confusion, tax problems, and credibility issues.

    As a business owner, you should pay yourself a fixed salary. Avoid withdrawing funds at random or covering personal expenses with business income. If you invest personal funds in the business, document it properly as a loan or equity contribution.

    Keeping your finances separate helps you maintain clear records, assess business performance accurately, and present your enterprise in a more professional light to partners, banks, and regulators.

    At Absa Bank, we believe that strong financial habits form the backbone of every successful enterprise. Our commitment is to walk with our clients and customers at each stage of their journey, providing guidance, tools, and solutions that help SMEs grow sustainably and with purpose.

    Source: Absa Bank

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

  • GEXIM CEO canvasses support for African SMEs to compete globally

    GEXIM CEO canvasses support for African SMEs to compete globally

    The Chief Executive of the Ghana EXIM Bank, Sylvester Mensah, is championing advocacy to push African leaders to be deliberate in their support for small and medium size Enterprises (SMEs) to compete globally.

    The support to SMEs includes assisting them to surmount regulatory hurdles by creating an environment that enables regulatory compliance, exposure to international networks and capacity building on best practices.

    Advancing his advocacy, Mr Mensah believes that for SMEs to grow and compete favourably, they must be assisted to penetrate global markets. He made his case with the GEXIM example which has deliberately sponsored a number of SMEs to trade fairs and international exhibitions to build networks and access other markets.

    “Access to markets creates more exports and generates foreign exchange for the country which is important to job creation and economic development”, he noted while speaking at the Global SME Finance Forum taking place in South Africa.

    According to him, “SMEs are integral to the development of economies. We must therefore champion their growth. Governments do not do SMEs a favour by supporting them to grow. SMEs hold the key to economic growth. Creating the environment and providing support for them to thrive is the way to go.”

    “African governments must be deliberate about supporting SMEs. One way of doing so is facilitating their acquisition of regulatory Licenses and certifications by creating a one-stop shop where SMEs can interface with regulators, meet requirements, and get their licenses; this ensures efficiency in their operations,” Mr Mensah advocated.

    In many third-world economies, Mr Mensah noted that information on securing licenses and relevant certifications is often sketchy and fragmented, yet regulators come hard at SMEs that fail to comply.

    Using the Ghana example to advance his call, he narrated that SMEs have to regularly interface with the Registrar of Companies to file their returns, as well as the Food and Drugs Authority, and the Ghana Standards Authority for standards certification and compliance.

    SMEs dealing with regulators to align their processes after non-compliance, he observed, increases their costs of operation. Hence, his suggestion of creating a one-stop shop where various regulators will have desks to attend to the needs of these enterprises.

    “Not only is this convenient for SMEs, but it also ensures efficiency in their operations,” the GEXIM Chief Executive told the Forum last week.

    Mr Mensah further emphasized the significance of SMEs to African economies, stressing their relevance to economic growth.

    He said, “SMEs are integral to the development of economies. We must therefore champion their growth. Governments do not do SMEs a favour by supporting them to grow. SMEs hold the key to economic growth. Creating the environment and providing support for them to thrive is the way to go.”

    The Forum was organised by the International Finance Corporation (IFC), under the auspices of the G20 is on the theme, “Building resilience and creating opportunities for growth.”

    The World Bank estimates that 1.2 billion new jobs need to be created for the young people projected to enter the workforce in the developing world by 2050. Meanwhile, only about 420 million new jobs are expected to be created.

    This significant gap highlights a major global challenge to provide enough employment for the growing youth population, emphasizing the urgent need for strategies that foster inclusive job creation. SMEs appear to be the most feasible avenue for the creation of most of these jobs essential for social stability and economic growth.

    It is against this backdrop that Sylvester Mensah made the call for support for SMEs. According to him, the support does not only mean funding but also other interventions to help SMEs scale over obstacles, expand, and create jobs.

    “Supporting SMEs does not only have to come through funding. Providing mentorship opportunities and capacity-building ensures their growth and sustainability. When they then get the funding, they are more likely to do better, as their knowledge and capacities have been enhanced,” he observed.

  • A GHS8.2bn SME growth and opportunity programme unveiled.

     

     

     

    President Nana Akufo-Addo has unveiled the SME Growth and Opportunity (GO) Programme at the SME Growth and Opportunity Summit held at the Kempinski Hotel, Accra.

     

    The initiative is aimed at boosting Ghana’s economic landscape.

     

    The comprehensive programme is backed by a substantial GHS 8.2 billion funding package and aims to support small and medium-sized enterprises (SMEs), which are pivotal to the nation’s economic prosperity.

     

    President Akufo-Addo emphasized the critical role SMEs play in Ghana’s economy, highlighting that they constitute 92% of businesses and contribute 70% to the GDP. Despite their significant contributions, SMEs face numerous challenges, particularly in accessing finance, which hinders their potential for growth and innovation.

     

    “The entrepreneurial spirit of Ghanaians has always been a driving force behind our economic transformation. Our SMEs are the backbone of our economy, and it is imperative that we support them to overcome the barriers they face,” President Akufo-Addo stated.

     

    The SME GO Programme, coordinated by the Ministries of Finance and Trade and Industry, seeks to address these challenges through targeted financing solutions and technical assistance. The programme’s key components include substantial funding allocations and the establishment of supportive infrastructure to bolster SME growth.

     

    Ghana Exim Bank: Supported with GHS 700 million, the Ghana Exim Bank will offer highly subsidized financial support for both capital and operating expenditures. A dedicated window for the 1-District-1-Factory initiative will also be set up to ensure optimal synergies with this structural project.

     

    Ghana Enterprises Agency (GEA): Allocated GHS 230 million, the GEA will target high-growth SMEs employing 100 or more people, providing small-scale grants and loans of up to two years at highly subsidized rates. This initiative aims to support businesses with strong potential for expansion and job creation.

     

    Development Bank Ghana (DBG): Utilizing GHS 1.4 billion, the DBG will provide loans with tailored repayment conditions through financial institutions. These loans, with terms of up to five years, will support SMEs with robust growth prospects.

     

    Additionally, the programme will see the establishment of a Food Innovation Hub on the University of Ghana campus. This hub will support food industry SMEs with modern processing equipment, warehousing, testing labs, and regulatory assistance. The hub aims to help SMEs that lack sufficient capital to access state-of-the-art processing facilities, thus enabling them to scale up production and meet export standards.

     

    “The Akufo-Addo Government is being intentional about supporting SMEs that are too large for small business finance yet too small to attract substantial commercial lending. This initiative aims to create ‘SME champions’ capable of taking Ghanaian products and innovations global,” the President said.

     

    The programme reflects the government’s broader strategy to foster a competitive, innovative, and globally oriented SME sector, which is crucial for Ghana’s long-term economic prosperity. The SME GO Programme is a continuation of the government’s commitment to economic transformation, following previous policies under the post-COVID plan for Economic Growth (PC-PEG).

     

    President Akufo-Addo reiterated the importance of a collaborative approach involving the government, private sector, and international partners to create a conducive environment for SMEs to thrive. The programme will be coordinated jointly by the Ministry of Finance and the Ministry of Trade and Industry, with the Ghana Enterprises Agency, Ghana EXIM Bank, and Development Bank Ghana serving as the principal implementing agencies.

     

    The Ministry of Finance has successfully mobilized GHS 8.2 billion from both public and private sector sources, earmarked for disbursement to eligible SMEs under the SME GO Programme. This funding will be disbursed through participating financial institutions, ensuring that SMEs with high-growth potential receive the support they need to expand and create impact across their communities.

     

    With this bold step, Ghana aims to enhance its long-term competitiveness and ensure sustainable growth by empowering SMEs, which are the backbone of the nation’s economy. President Akufo-Addo concluded his address by emphasizing the need for collective effort to break the barriers hindering SME growth and unleash their full potential for the benefit of all Ghanaians.

     

    By creating an enabling environment that supports innovation, entrepreneurship, and resilience, the SME GO Programme is set to transform the economic landscape of Ghana, driving inclusive and sustainable growth for years to come.