By Ghana News

Copyright ghanamma

The Institute for Liberty and Policy Innovation (ILAPI) has raised concerns over the increasing rate at which Small and Medium-sized Enterprises (SMEs) in the country are losing at least 30 percent of their startup capital due to regulatory compliance.

According to ILAPI, this situation threatens Ghana’s job creation and business growth efforts.

Speaking at a workshop, the Executive Director of the Institute, Bismark Kwofie, said startups with a minimum capital of GH¢100,000 risk spending about 20 to 30 percent on business regulation alone.

This, he noted, is a major challenge that restricts young startups from thriving in the market.

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“In Ghana, if you have about GH¢100,000 as capital, you should expect about 20 to 30% to go into business regulation alone. It also means that about three to five people will lose their jobs or won’t be employed. The more you grow the business, the more the requirements,” he said.

Drawing parallels between Ghana and Spain

The General Secretary of the Foundation for Economic Advancement, Juan Pena, expressed concern over how excessive regulation is affecting innovation and entrepreneurship in Ghana.

He said a shift toward more flexible systems such as Positive Silence and Responsible Declaration models, would allow businesses to begin operations after meeting requirements, without waiting for lengthy bureaucratic approval.

“Ghana would really progress much faster if most of those regulations were either discarded when possible or at least changed to a system of what we call Positive Silence that means you ask the administration for a certain thing, and if they take longer than X amount of time, then it is granted and responsible declarations,” he explained.

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