2024 is the biggest election year in history: What policies are being discussed for MSMEs?
The year 2024 is shaping up to be one of the most consequential election cycles in recent history, with elections taking place across major democracies that will undoubtedly shape the global economic landscape.
While countries like Mexico and the European Parliament have already held their elections, key elections such as the U.S. presidential election are still upcoming, as are others, including Ghana’s presidential election in December. For micro, small, and medium-sized enterprises (MSMEs), these elections could have significant ramifications.
The US election: economic policy and MSMEs
The United States is gearing up for its 2024 presidential election, with candidates from both major parties presenting a variety of economic proposals.
While inflation, tax cuts, and the national debt dominate the conversation, there has been a notable silence regarding targeted policies for MSMEs.
These businesses account for 99.9percent of U.S. firms and employ nearly half of the private workforce¹. Yet, discussions surrounding tax relief, access to capital, and regulatory reform for MSMEs remain sparse.
Even conversations on inflation and interest rates, which have seen Federal Reserve hikes, fail to address the unique burden this places on smaller businesses. Higher borrowing costs disproportionately affect MSMEs, which often rely on short-term credit to finance daily operations².
While candidates have proposed broad economic solutions like tax cuts for businesses and regulatory easing, without specific support for MSMEs, these measures risk benefiting larger corporations more, further entrenching inequalities in the business ecosystem.
Ghana’s election: MSMEs in a developing economy
Ghana’s upcoming presidential election in December 2024 is poised to be a defining moment for its economy, which is facing significant pressure from inflation, external debt, and unemployment³.
While there is heated debate over macroeconomic stability, the nation’s political conversation has similarly overlooked the MSME sector.
Ghana’s MSMEs are a critical part of its economy, accounting for over 70percent of jobs⁴. Despite their pivotal role in fostering inclusive growth and combating poverty, policy proposals addressing their unique challenges have been few and far between.
Issues like the high cost of credit, limited access to financing, and a burdensome regulatory environment have crippled the sector for years. Although candidates promise to revamp the economy, there’s little discussion on easing loan restrictions or providing fiscal incentives for MSMEs to thrive.
In 2022, the government initiated the YouStart programme to foster entrepreneurship and support small businesses, but its execution has faced several obstacles, including bureaucratic bottlenecks⁵.
As candidates discuss how to curb the nation’s rising debt or renegotiate agreements with international creditors, the conversation about support for MSMEs must rise to the fore.
Without a structured, long-term strategy, MSMEs will continue to face the same struggles, limiting their ability to absorb Ghana’s growing unemployed youth.
Lack of focus on MSMEs: A global trend
The failure to give MSMEs a prominent place in political discussions is not unique to the U.S. and Ghana. In many elections worldwide, the rhetoric revolves around macroeconomic issues like inflation, debt, and GDP growth—topics that, while important, do not always address the day-to-day realities faced by MSMEs.
For both developed and developing economies, the neglect of MSMEs in political campaigns is concerning. These enterprises are not only crucial for job creation but also for innovation and economic resilience⁶.
In developing countries like Ghana, MSMEs play an even more critical role in uplifting low-income households and building self-sufficient communities. Without supportive policies, the growth of this sector remains stunted, and so does its potential to contribute to national economic development.
The impact of policy neglect on job creation and poverty
In both the U.S. and Ghana, MSMEs have historically been engines of job creation. By fostering entrepreneurship and providing employment opportunities to a large portion of the population, they help alleviate poverty and promote equitable growth. However, if policymakers continue to overlook the sector, the ramifications could be severe.
The lack of targeted support will constrain MSMEs’ ability to scale up, innovate, or compete with larger corporations.
This will ultimately limit their capacity to create jobs and could exacerbate unemployment, especially in countries like Ghana, where large segments of the population depend on the informal sector. Moreover, without sufficient access to capital, MSMEs may struggle to transition into more productive enterprises, keeping many entrepreneurs trapped in a cycle of low-income activities.
This could further marginalize the poor and limit social mobility, particularly in emerging markets.
A call for comprehensive policies for MSMEs
The 2024 elections present a critical opportunity for politicians to rethink their approach to MSMEs. Comprehensive, well-targeted policies are essential to unlocking the potential of these enterprises and boosting long-term economic growth.
Such policies must address the core issues that plague the sector: access to affordable credit, tax incentives, regulatory reforms, and support for innovation.
In the U.S., policymakers must prioritize initiatives that provide MSMEs with access to affordable capital, particularly as interest rates remain high. There is also a need to streamline regulations and reduce the bureaucratic burden, allowing these enterprises to thrive without being bogged down by compliance issues.
For Ghana, candidates must prioritize policies that simplify access to finance for MSMEs and promote technological adoption. They must also build on existing programs like YouStart, refining them to make the disbursement of funds and resources more efficient. Targeted training and capacity-building programs can equip MSMEs with the skills needed to compete in the global marketplace.
As we approach the culmination of this historic election year, policymakers must recognize the centrality of MSMEs in driving sustainable economic growth. Without comprehensive support, the sector will continue to underperform, depriving millions of people of the opportunity to escape poverty and realize their entrepreneurial potential.
>>>The writer is Kwaku Ofori, an expert in Small Business Management and Microcredit, a Chartered Accountant, and a STEM MBA Fellow at Babson College, Massachusetts. He can be reached via gh.kwakuofori@gmail.com
References
- S. Small Business Administration. (2023). 2023 Small Business Profile
- Federal Reserve Bank. (2024). Economic Outlook and Policy Projections
- Institute of Economic Affairs Ghana. (2023). Ghana’s 2024 Election and the Economy
- Ministry of Trade and Industry, Ghana. (2023). Annual Report on MSMEs in Ghana
- Ghana Investment Promotion Centre. (2023). Update on the YouStart Program
- International Finance Corporation. (2024). MSMEs and Economic Development: A Global Perspective