Ghana has, though a Legislative Instrument, revised the existing categorization of Micro, Small and Medium Enterprises (MSMEs). This follows the passage of the Ghana Enterprises Agency (Classification of Micro, Small and Medium Enterprises) Regulations, 2023 (L.I. 2470).

As the world marks the International MSME Day on June 27th, 2024, one of the highpoints of Ghana's activities for the day is the launch of the new Ghana Enterprises Agency (GEA) classification and definition of MSMEs, as contained in the Legislative Instrument.

The revision followed series of consultations with, and receipt of inputs from several relevant stakeholders including the Ministry of Finance, Bank of Ghana, Ministry of Employment and Labour Relations, National Development Planning Commission, Association of Ghana Industries, Private Enterprises Federation, Association of Small Scale Industries, Food and Drugs Authority, Ghana Association of Bankers, Private Sector among others.

The consultation process confirmed that the national definition set out over twenty years ago had not only become outmoded, but also impractical to apply especially with respect to the small and medium enterprise categories, as the numerical ranges had been overtaken by current economic and financial realities.

Classification of firms as “large, medium, small and micro” by only an employment criterion was found to be misleading.

The rationale for the policy-based classification of MSMEs was informed by a number of criteria including the need to create a focus in government policies targeted towards MSME development which demonstrates Government’s strong commitment and clarity in vision towards private sector development and growth of entrepreneurship in the country.

It was also aimed at serving as a strategic roadmap and a justification for the Government to budget and commit resources for MSMEs and entrepreneurship development.

The revision was also aimed at establishing a clear administrative, legal, regulatory, and institutional framework that will strengthen the Ghana Enterprises Agency as the apex body, well-resourced to coordinate MSME development activities and support them with the requisite interventions.

The need to outline clear guidelines and the requisite governance structure for existing businesses, prospective investors, funding agencies, service providers and financial institutions and other key stakeholders that work directly or indirectly in the promotion and growth of MSMEs was also one of the rationales for the policy-based reclassification.

The earliest definition and classification of MSMEs was done in 1980, when Ghana was classified as a low-income economy. Having attained the status of a lower middle-income economy, necessitating a rebasing of its growth indices, it became necessary to redefine the parameters of the MSME categorization.