30 Mar Empowerment For MSMEs: The Ghana Enterprises Agency Act, 2020 (Act 1043).
The Ghana Enterprises Agency (GEA) Act, 2020, (Act 1043) (the “Act”) has repealed the National Board for Small Scale Industries (NBSSI) Act, 1981, (Act 434) and the Ghanaian Enterprises Development Act, 1975 (NRCD 330).[1]
As a foundation to this development, NBSSI, was established as the apex body for the development of small-scale industries in Ghana.[2] It functioned as a non-profit public sector organisation under the Ministry of Trade and Industry[3] with a mandate delimited to the Small-Scale Industry (SSI). Although this classification was relevant at the time of its establishment, globally, the emphasis has changed from Small Scale Industries to Micro, Small and Medium Scale Enterprises (MSMEs).
In keeping with the times, the Act, creates the Ghana Enterprises Agency (the “Agency”) to replace the NBSSI. The Agency represents the entire continuum of enterprises that fall within the MSME class.
The Act provides an appropriate institutional and legal framework for the coordination and promotion of programs and projects for the development of the MSME sector in Ghana.
Some changes and notable inroads made by the Act are highlighted below. This will be done by looking at the nature of the Agency, the functions of the Agency, funding of the Agency, the establishment of the MSME Fund and the Internal Audit Unit and the transitional Provisions.
Nature of The Agency.
Unlike the NBSSI which was established as a Board[4], the Agency is a corporate body.[5] This upgrade gives the Agency legal personality recognizable by law, and as such it can hold and dispose of property, sue and be sued, as well as enter into a contract in its own capacity.[6]
Functions of the GEA.
The change in focus from SSIs to MSMEs has been largely implemented through the functions of the Agency. The functions of the Agency include promotion, policy implementation, development of classification criteria and establishment of a service delivery network for the MSME sector in Ghana. It must also facilitate access by MSMEs to financial and non-financial resources including credit facilities.[7] These functions, if well explored would be beneficial to MSMEs.
Establishment of the MSME Fund.
Although the NBSSI was providing low-cost funding for businesses, this was not part of its mandate under the NBSSI Act. The GEA Act has regularized this by establishing the MSME Fund[8]. The object of the fund is to provide funding for MSMEs. It will achieve this by applying the proceeds of the fund to relevant activities determined by the Agency.[9] The Fund will be financed by moneys approved by parliament, grants, gifts, donations, voluntary contributions and moneys which may become lawfully payable to the Agency. The Fund is to be managed by the governing board of the Agency.
Funding of the Agency.
Similar to the NBSSI[10], the Agency is funded by money approved by Parliament, seed money allocated by government, internally generated funds, donations and grants approved by the Minister of Finance. Unlike the NBSSI, the Agency can now obtain loans in its own capacity, subject to the approval of Parliament[11] and the prior written approval of the Minister of Finance[12].
Internal Audit Unit.
The retiring NBSSI was required to keep proper books of accounts subject to annual audit by the Auditor-General.[13] The new Agency takes this a step further by instituting an Internal Audit Unit headed by an Internal Auditor, who is appointed in accordance with the Internal Audit Agency Act, 2003. Quarterly, the Auditor must prepare and submit a report on the internal audit to the Minister, Auditor-General and the Chairperson of the Board. This structure is not only in line with Ghana law[14] but also more closely reflects best practice in accounting.
Transitional Provisions.
To ensure a smooth transition from the NBSSI to the Agency, the Act provides a saving provision.[15] According to the saving provision, the assets and liabilities, members of staff, contractual liabilities and moneys of the erstwhile NBSSI and GEDC have been transferred to the Agency.
Overall, the GEA Act seeks to refocus on MSMEs. It establishes a more efficient and independent body to facilitate and tend to the needs of MSMEs in Ghana, with the intention of a better empowered and expanded MSME sector.
[1] National Board for Small-Scale Industries Act, 1981 (Act 434) Section 34
[2] Ibid
[3] Ibid
[4]National Board for Small-Scale Industries Act, 1981 (Act 434) section 1
[5] Ibid
[6] National Board for Small-Scale Industries Act 1981 (Act 434) section 1
[7] Ghana Enterprises Agency Act 2020 (Act 1043), Section 3
[8] National Board for Small-Scale Industries Act 1981 (Act 434), section 27
[9]Ibid, section 28
[10] National Board for Small-Scale Industries Act 1981 (Act 434) Section 10
[11] The 1992 Constitution, Article 181
[12] Public Financial Management Act, 2016, Act 921, section 76
[13] I National Board for Small-Scale Industries Act 1981 (Act 434) Section, section 11
[14] Public Financial Management Act, 2016, Act 921, section 83
[15] NBSSI, section 35