Ghana's regulatory environment imposes significant financial and administrative burdens on micro, small, and medium enterprises (MSMEs). This complex system limits their ability to formalise, expand, and create jobs, according to a recent study by the Institute for Liberty and Policy Innovation (ILAPI).
The study, based on a survey of 600 MSMEs conducted between September 2024 and July 2025, highlights a critical challenge for Ghana's economy. MSMEs account for approximately 92 per cent of all businesses in the country. They also contribute nearly 70 per cent of Ghana's Gross Domestic Product (GDP), making their health vital to national prosperity.
This regulatory maze includes overlapping institutional mandates, excessive documentation, and inconsistent enforcement. It also involves prolonged registration and compliance processes. These issues collectively prevent MSMEs from reaching their full potential, impacting job creation and economic diversification. The findings underscore a systemic problem that has long plagued Ghana's business landscape, hindering the growth of its most numerous economic actors.
Ms. Samiratu Sakibu, who runs Mira Taste Services, an agro-processing business, exemplifies these frustrations. She questions why her business must pay for both a business operating permit and a property-related permit for the same premises. Ms. Sakibu stated, “I have to pay for my business operating permit. We are also asked to pay for a property permit because the property belongs to us and we have a shop in front of it.”
The ILAPI study provides concrete figures for these burdens. It found that the average cost of obtaining a business entry certificate was GHS 1,030. Permits averaged GHS 1,275, and licenses cost an average of GHS 1,600. Some businesses reported spending as much as GHS 3,000 on licenses alone. Business registration costs ranged from GHS 60 to GHS 2,000, adding to the initial financial strain on new ventures.
For larger companies, these expenses might be manageable within their operational budgets. However, for a small business with limited working capital, every additional payment directly competes with funds needed for essential equipment, stock, or hiring new workers. This financial pressure can severely restrict an MSME's capacity to invest in growth and expand its operations.
Ms. Sakibu also highlighted the issue of repetitive costs, such as fire extinguisher renewals. She noted that while fire safety is crucial, the renewal process often involves paying amounts similar to purchasing a brand-new item. She said, “If it is something I have already purchased the previous year and I just need a refill, I don't understand why I should pay the same amount as buying a brand new one.”
The ILAPI research identifies overlapping institutional mandates as a key weakness. Businesses often obtain approval from one institution, secure a sector license from another, and then undergo similar inspections by multiple agencies. Institutions like the Ghana Standards Authority, Food and Drugs Authority (FDA), Environmental Protection Agency, public health authorities, and municipal authorities often have overlapping requirements.
This lack of coordination means MSMEs spend excessive time and money navigating a fragmented system. Repeated inspections, applications, and payments consume valuable resources that could otherwise be directed towards business development. This burden can either be passed on to consumers, increasing prices, or absorbed by businesses, reducing their ability to invest and grow. The ILAPI warns that such burdens can also discourage entrepreneurs from formalising their businesses, keeping them in the informal sector.
Delays in obtaining permits also create significant opportunity costs. The ILAPI study found that 40.8 per cent of surveyed businesses took more than one month to obtain their business entry certificates. Only 17 per cent completed the process within one week. Another 22.8 per cent took three to four weeks, and 13.8 per cent took one to two weeks. These prolonged waiting periods mean entrepreneurs spend time chasing approvals instead of focusing on their core business activities, further hindering productivity and growth.
The implications of these findings are substantial for Ghana's economic future. Policymakers must address these regulatory inefficiencies to unlock the full potential of MSMEs. Streamlining processes, reducing redundant requirements, and improving inter-agency coordination could significantly boost business formalisation and expansion. This would lead to increased job creation, higher GDP contributions, and a more robust and diversified economy. Failure to act risks stifling the very engine of Ghana's economic growth.