Prof. John Rand during his presentation
Prof. John Rand of the Department of Economics, University of Copenhagen, has asserted that male–owned small enterprises are grossly disadvantaged mainly due to pure female gender favouritism in granting of loans to micro and small firms.
Prof. Rand made this assertion during the University of Ghana’s 4th Development Policy & Practice Talk organised by its Development Policy Poverty Monitoring and Evaluation (DPPME) Center of Research Excellence, in conjunction with the Institute of Statistical, Social and Economic Research (ISSER) and the Centre for Sustainable Enterprise Development (CSED).
The Centre for Sustainable Enterprise Development (CSED) is currently headed by Prof. Robert Hinson, Department of Marketing and Customer Management, University of Ghana Business School.
Speaking on the theme, ‘SME Credit Constraints: Revisiting the Gender Dimension of an Old Development Policy Challenge’, also the title of his research, he established that though there are numerous studies on the gender-credit relationship in households, little is known about gender discrimination in credit allocation among formal entrepreneurs in Africa.
He argued that favouristism, and not superior managerial skills, is the primary reason why female-owned small enterprises are less likely to be credit constrained since the gap is reversed for medium-size enterprises. According to him, the ‘over-shooting’, that is, the recent focus on serving female-owned smaller enterprises credit demand, may have distorted credit allocation in a non-optimal manner. Despite the favouritism factor as key in ensuring the credit safety of female-owned small enterprises, he maintained the disparity in gender differences in credit constraints are small and affected by size, sector, and location.
Prof. Rand consequently recommended donors and policy makers, to rather focus the effort on improving the functioning and competitiveness of the financial sector instead of merely calling for more credit to small female-owned enterprises.
Ghana, he stressed, must therefore employ an industrial strategy that goes beyond investment climate concerns since, though central to economic success, it may not be enough to overcome the advantages of the world’s existing industrial locations. This, Ghana could do, by adopting and committing to long-term strategic development plans, diversify instead of specialising in a single industry, and be willing to take risks, he concluded.
Prof. Rand’s assertions are based on analyses of data on credit constraint differentials between male and female manufacturing entrepreneurs from 16 sub-Saharan African countries, including Ghana. He premised his study on current researches in the field being too abstract and inapplicable to real-world issues and explored the issue of credit because it drives industrialisation and creates structural transformation.
Dr. William Baah Boateng of the Department of Economics, University of Ghana (UG), who chaired the event, noted that the DPPME is one of four research thematic areas to be developed into centres of excellence. These include malaria research; food production and processing; and climate change adaptation, which form part of UG’s efforts to deepen policy relevance of research.
The Development Policy & Practice Talks have so far hosted Professors Klaus Grunert, Soeren Jeppesen, and Mette Morsing, all of Denmark’s University of Copenhagen, who have spoken extensively on ‘Food Marketing and Poverty Alleviation’; ‘Corporate Social Responsibility and Small and Medium Enterprises’; and ‘Corporate Social Responsibility and MNEs’, respectively.
Participants listening attentively at the session
