Small and Medium Scale Enterprises (SMEs) the world over are being recognized as integral components of the sustainable and developmental growth of any country. This position is arrived at also from the identification of the sector as one that employs the largest labor.
According to research conducted by the United States Agency for International Development (USAID), SMEs make up the bulk of businesses contributing a whopping 92%. SMEs also employ about 85% of the labor in the manufacturing sector subsequently contributing 75% to Ghana’s Gross Domestic Product (GDP).
These figures highlight the vital role that SMEs play in Ghana and how essential they are to the development process of the country. It has been well established that the most affected sector by the impact of the COVID-19 pandemic is the SME sector. Consequently, there have been a number of both public and private interventions aimed at supporting Ghanaian SMEs to survive the COVID-19 pandemic.
For instance, the government through the National Board for Small Scale Industries (NBBSI) has instituted the COVID-19 Alleviation Programme (CAP) business support scheme to cushion businesses negatively impacted by the coronavirus (COVID-19) pandemic. Recently, Stanbic Bank entered into an agreement with Investing for Employment (IFE), an offshoot of KFW, the German Development Bank, to safeguard jobs in the SME sector in the wake of the COVID-19 pandemic.
What these interventions make apparent is that, finances and the systems that monitor such financial transactions are essential to the survival of SMEs. The world is evolving and evolving with it are the payment systems. The system currently being pushed for is the cashless system where monetary transactions are carried on to digital platforms, especially as COVID-19 brought restrictions on movements and other physical interactions.
The benefits that these alternative modes of conducting business provide are numerous. First, they offer some more security and safety that transactions with physical cash do not offer. In the situation where people physically move their money to their places of business or to vendors especially, SMEs in the buying and selling sector, the threat of theft, diversion, accidents and others are apparent. However, when these alternative means are used, these threats are minimized somewhat even though a larger threat of electronic fraud and cyber hacking come into play.
There is this assurance of protection from these larger threats by the executors as stiffer security against such possibilities is ensured. Secondly, the larger risk of cash diversion to undertake in other activities is avoided. This allows for proper books to be kept. This is because all transactions are conducted electronically so they end up in the accounts of the SMEs, facilitating good accounting. Another important benefit of emerging payment systems to SMEs is the opportunity it allows for still conducting business even with the global markets in the absence of physical cash.
In spite of the benefits that alternative payment systems afford, there is a substantial downside and that is the security or inadequacy thereof. These include the cases of fraud, information theft and the general digital security concerns. This is a critical shortcoming that SMEs must consider especially in informing their decision whether to adopt or not to adopt an alternative payment system. Most people are more comforted when their cash is within their sights and available to them at a moment’s notice.
The attitude of trusting someone else or a system that is not present with the task of handling money put bluntly is a preposterous suggestion to the lay man or the small start-up. Therefore, the responsibility falls at the feet of institutions, like the banks and more recently the telecommunication companies that operate mobile payment systems that act as facilitators of the payment process to become better educators of these emerging payment systems and highlight the benefits in order to increase their adoption.