Majority of MSMEs don’t trust justice system – Study

Economics Msme Justice Service
Msme Justice Service

Majority of Micro, Small, and Medium Enterprises (MSMEs) do not trust the country’s justice system, a study conducted by the Centre for Democratic Development (CDD-Ghana) has revealed.

The study found that less than one-fifth of MSMEs owners/caretakers used the formal justice system to resolve business-related disputes with their clients, creditors, tax authority, and utility companies, among other institutions.

Whereas 87 per cent of businesses lacked trust in the judicial system, 10 per cent were concerned about the length of time taken by courts to resolve cases, with three per cent pointing to demand for money or favours by police officers as the reasons for not accessing formal justice service.

The study also found that majority of MSMEs (62 per cent) “are unwilling to pay more taxes”, with most business owners citing lack of accountability and quality service delivery among public institutions as basis for their unwillingness.

The CDD-Ghana, therefore, underscored the need to improve awareness of the court system and its service delivery procedures.

The findings of the study were disseminated at a workshop in Accra on Thursday.

MSMEs refer to enterprises that employ as few as one employee (micro, 1-5) to as many as 100 employees (medium, 35-100).

They constitute 99 per cent of enterprises in the country and account for at least 70 per cent of the country’s Gross Domestic Product, as well as create about 81 per cent of new jobs.

Between August and September 2020, the CDD-Ghana, with support from GIZ, set out to explore and document the experiences of MSMEs in accessing justice and other public services.

The researchers sampled the views of 780 MSMEs in three regions (Greater Accra, Ashanti, and Northern Regions) and conducted in-depth interviews with policy makers, policy implementation units and service providers.

Presenting the findings of the study, Ms Mavis Zupork Dome, a Research Analyst at CDD-Ghana, said MSME owners who accessed the formal justice system to resolve business-related disputes, cited loss of productive hours, reduction in business operating capital, and damage to business reputation as the major impacts of the court cases on their businesses.

She also mentioned lack of capital, rising cost of inputs and high fees and taxes as the top three challenges faced by MSME owners.

“Majority (62 per cent) of MSMEs owners/caretakers are unwilling to pay more taxes, even if it means more government services, SMEs are still equally split in their opinion on the willingness to pay more taxes, even if they knew how the government uses tax revenues,” she said.

Dr Kojo Pumpuni Asante, the Director of Advocacy and Policy Engagement at CDD-Ghana, said despite its immense contribution and potential, the MSME sector faced many problems, adding that failure on the part of authorities to respond to those challenges could undermine the development of the country.

“We find it critical to understand more clearly the issues facing this sector as it relates to accessing public services, including justice services and the need to proffer policy recommendation to improve the sector to maximise its full potential,” he said.

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