Improving SME financial performance in Ghana: A randomised controlled trial
This policy brief highlights the significant role of working capital management training on the performance of SMEs in Ghana, providing policy recommendations to improve SME sustainability, efficiency, and resilience.
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Amoah et al Policy Brief September 2024.pdf
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- Small and medium-sized enterprises (SMEs) are significant contributors to economic growth and development; however, their performance is stifled by ineffective working capital management practices. Because of poor financial literacy among Ghanaian SME managers, many SMEs encounter cash flow problems due to slow customer payments, excessive/scant inventory, etc, which affect their financial performance.
- This study examines SMEs' working capital management practices and investigates the effect of best practice working capital management training on SME financial performance.
- The study employs an experimental design involving 288 SMEs in the Greater Accra Region of Ghana.
- The study finds that access to knowledge and skills on effective working capital management leads to greater firm performance, evidenced by improved sales, reduced cash conversion cycle, and higher profit. The increase in profit is estimated to be approximately 26%.