Abstract:
There is growing recognition of the important role Small and Medium-
Scale Enterprises (SMEs) play in economic development. SMEs are often
described as efficient and prolific job creators, the seeds of big businesses and
the fuel of national economic engines. This study set out to examine the
investment readiness, access to external finance and performance of SMEs in
the Accra Metropolis in Ghana. A mixed method approach employing both
quantitative and qualitative research methodology was utilized. Face-to-face
interviews using questionnaires were employed to collect data from 500
owner/managers of SMEs in the metropolis. In addition, eight groups of 14
members each were organised for focus group discussions. Structural equation
modeling using partial least squares and the Ordinary Least Square were
employed to examine the relationships.
The results of the study revealed that access to external finance has a positive and significant effect on
the performance of SMEs. Secondly, the
investment readiness variables such as owner/manager^ age, financial
leverage and financial information were found to have positive and significant
relationship with access to external finance of SMEs. Also, owner/manager9 s
age, years of experience and financial information were found to have positive
and significant relationship with SME performance. The study implies that, in
addition to increasing the supply of finance to the SME sector, governments can enhance the ability of SMEs to access the available funds by ensuring they
are investment ready. It was recommended that government should support
SMEs and also develop programmes to enhance investment readiness amongst
SMEs.
