The Ghanaian entrepreneurial mentality; Lessons from the current state of the micro finance industr
- By: Anane Kyeremeh
- Jun 30, 2015
- 6 min read
Entrepreneurship is define as the capacity and willingness to develop, organize and manage a business venture; along with any of its risks in order to make a profit. Entrepreneurship may also be defined as the realization and visualization of new ideas by insightful individuals, who are able to use information and mobilize resources to implement their visions.
Entrepreneurial spirit is characterized by innovation and risk-taking, and is an essential part of a nation's ability to succeed in an ever changing and increasingly competitive global marketplace. Entrepreneurship is very crucial in many developing economies which perceive the private sector as the engine of growth; however, the one very dangerous aspect of entrepreneurship is its inherent risks, which has the tendency to portray the whole entrepreneurial venture as a death trap than wealth creation machinery.
I watched a video, “Steve Jobs and Bill Gates face off”, uploaded on www.youtube.com on October 2011, which sought to outdoor the contribution of both gentlemen to the computer technology industry.
On that show, Steven Paul, “Steve Jobs”, Former Chairman and CEO of Apple Inc. was once asked by one of the two hosts, to give one very important advice to up and coming entrepreneurs; and what he said was, “everyone who wants to embrace entrepreneurship must have or develop a strong pertinacity to survive, because the terrain is full of risks and requires passion and unflinching commitment to live to tell the tale”. In Ghana, most entrepreneurs have survived and proven successful, but many more enterprises and businesses have also failed to grow beyond the introductory stage; writing very regrettable stories for prospective entrepreneurs to read.
Entrepreneurship almost always originates from innovation, but the Ghanaian entrepreneurial mentality has always been; “what business venture is moving now”, without prior experience in the field of the industry, no proper background search and without due diligence; people who have money to invest; just rely on their sight and sounds of informants to decide on where to invest.
I heard about the microfinance industry around year 2007, and I could recall almost every prospective investor was rushing to squeeze stones for water to invest in the seemingly booming fast moving industry. Today; less than a decade ago; no one wants to waste time to listen to lectures on microfinance. Someone just asked me why? And I quickly answered why not? Or did I answer a question with another? It is simple, we always hasten to jump into the water before we test the temperature, and when we realize it is uninhabitable we equally hasten to run out.
A thesis I submitted to the University of Education-Winneba, as partial fulfillment for the award of my Second degree; was titled, “An analysis of strengths, weaknesses, opportunities and threats of the microfinance industry”, with some selected microfinance institutions in Kumasi as a case study. I became engrossed in the topic as a result of my curiosity to unravel the mystery behind the quick extinction of an industry once touted as one of the best investment destinations in contemporary Ghana.
In my research, I sought to establish what gives microfinance institutions the cutting urge over other institutions in the Finance industry; and what I found was; door to door service, consideration for small and start up businesses, emergency loan scheme, consideration for the informal sector, susu scheme and their quick response to customer invitations.
I also tried to ascertain what makes it hesitant for other prospective clients to choose banks ahead of the microfinance firms, and what I found was difficulties in cash withdrawals, high interest rate on loans, panic withdrawals, excessive client exit and poor public image.
The challenges or what threaten the continues existence of the microfinance industry were identified as; high loan default rate, difficulties in tracing loan defaulters, difficulties in tracing fraudulent mobile bankers, panic withdrawals, intricacy in accessing bank credit, excessive client exit and poor public image.
On the other hand, I also needed to discover the motivating factor for those who venture into the microfinance industry, in search of broader opportunities for the future, and the discovery was quite inspiring.
Some had a vision to graduate into savings and loans institutions and even grow into a banking institution, maximize profit to invest in other equally lucrative ventures like import and export of consumer products, as well as creating an assurance for a future with enviable financial reward.
These ideas looked very promising and enthusiastic, but how they were going to be realized, was a movie worth categorizing a tragedy. Perhaps a few decisions could have been taken right, to turn the tragedy into a comedy; because I interviewed bankers and asked them to offer free advice to management of microfinance institutions and this is what they told me; improve reliability and integrity, improve public image, reduce loan portfolio, ensure adequate security on loans, be prompt on customer cash withdrawals, improve on loan recovery rate, improve on cash flow management and reduce interest rates.
It sounds laughable, but let me be honest with you; that you can easily commit suicide when you invest huge in an unknown and ill researched terrain. Unfortunately, this has been the norm and is still the norm in Ghana even as at today. People have realized that there is something new on the streets called “Adinkra Pastries”, it is innovation, because pastries have always been on the streets, but it would not be surprising that, the next entrepreneur might come out with another brand of pastry called “makramo Pastries”, virtually adopting the same or similar style of marketing from Adinkra Pastries, smh; that is the Ghanaian understanding of innovation. We are be devilled with cheap work, excessive profiteering, laziness and mediocrity; but we fail to assess ourselves, to realize that; such things don’t last.
Innovation is a new idea, a more effective device or process, which can be viewed as the application of better solutions that meet new requirements, unarticulated needs or existing market needs.
Innovation can as well be defined as something new, original and more effective, that breaks the existing market norms and captures a reasonable share by providing a solution for societal need.
It is very important to search for new and better ways to improve the society than relying on or copying other people’s ideas. The first thing one needs to do to find innovative ideas, is to believe that a solution exists for every single problem, and in actual fact, better and less costly solutions are available for us to explore for the benefit of us and the entire society. For example, if you contract diseases that cannot be cured, you will settle on Medication to prevent the situation from aggravating or leave your fate to luck, however, if you believe it is curable; you will keep searching and researching until you get a cure. In fact this is how inventions and technology has evolved.
The second prerequisite to be innovative is to develop tenacity against people who will try to make you think stupid or a jerk, just because they don’t see the possibility in actualizing your vision. Sometime others try to convince you that you are totally insane, either because they want to scare you and take over the idea or they just don’t see what you are seeing. When Apostle Kwadwo Sarfo started his Kantanka technology, a prominent publisher “Kwasi Pratt Junior of the Insight newspaper”, referred to his inventions as “fanciful technology”, but I wonder what he has to say about his inventions today.
It is necessary to note that, existing businesses embark on survey to improve features and quality of their products from time to time, so why could one assume that, you can just jump start a business venture without prior experience and adequate research in the particular industry? You are not likely to get one hundred percent honest responses, but at least you can land on some few reliable and verifiable responses from experienced people, to gather an opportunity for better planning and organization of your project.
Conclusion
I want to conclude this discussion by advising wealthy citizens to partner with people with vision and experience to create businesses that will survive the test of time and generate reasonable returns to reward the investors, instead of replicating innovative ideas from the less endowed.
References
Author: Anane Kyeremeh
Anane Kyeremeh is a freelance writer, Radio Presenter and a Business Analyst and he currently serves as the Commercial Manager of Far East Mercantile Limited - Kumasi
+233-20-813-4495
+233-20-121-1286
Email:kyeremehkyeremeh@yahoo.com
