Debt Management Challenges Facing Small Business Holders of Kaneshie Market, Accra-Ghana

Abstract

The study investigated the debt management challenges facing small business holders in Ghana. Among its objectives were to identify for analyzing the sources of funding of small businesses, to examine their debt management strategies as well as to identify challenges and other constraints bedeviling their debt management efforts. In conducting the study, the researcher employed random sampling technique to pick ten (10) key business segments of the market, which constituted the sample space. From these strata, purposive sampling technique helped in selecting traders, who in the opinion of the study, wielded the kind of information needed to address the study objectives. The interview guide was the main research instrument while basic descriptive statistics was laced up with Statistical Package for Social Science (SPSS) to facilitate the analysis of information captured from the field. The study was also motivated by the fact that small businesses generate close to 90% of employment in the country; however, owing to poor debt management and liquidity challenges, most of them collapse within a few years of establishment, thereby worsening the huge unemployment situation in the country. The study found out that most traders start operations with their own personal savings or sell family property while others solicit funds from friends and relatives to begin operations prior to looking for external injection to develop operations. With respect to debt management strategies, it came out clearly that most of small business holders plough back profits to pay off loans, follow religiously current ratio arrangement instituted with the banks as well as ensure that short-term loans are not used for long-term projects. Challenges confronting debt management efforts included poor sales revenue, unfair trade practices from dumped Chinese goods as well as the temptation to use business loans for acquiring capital items. In the light of these challenges, the study recommended that, central government and other stakeholders cooperate to ensure the successful operation of the sector.