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Workers' organizations and SME-growth: A misrecognised link

Zjos Vlaminck | 06 October 2014

While the roles of trade unions and informal workers’ organizations are little understood, these networks can play a significant role in stimulating SME growth on a micro, meso and macro level.

The roles of trade unions (TUs) and informal workers’ organizations (IWOs) in promoting SME growth in Africa are little understood. Studies on SME development have primarily focused on policy environments, access to credit and obstacles to increasing productivity. African workers’ organizations have not been part of the picture. Yet these organizations can play a significant role in stimulating SME growth on a micro, meso and macro level.

The reason for the omission of workers’ organizations – encompassing trade unions as well as informal workers’ organizations – from the academic and policy debates on SMEs, is straightforward: SMEs are perceived to be on the side of enterprises, capital or the employers. From a classical corporatist perspective their interests should therefore ideally be represented by employers’ associations, instead of workers’ organizations (ILO, 2013).

In reality, however, the nature of workers’ organizations in many African countries differs from those in Northern countries, where the distinction between labour and capital, employees and employers is much clearer. In African countries clear-cut divisions between who’s a worker, who’s an entrepreneur or who’s an employer are difficult to draw. Categorizations become even more problematic when people’s perceptions on their own employment status are taken into account; hairdressers employing apprentices in their salons, for example, might choose to organize across the employer-employee divide in order to stand stronger towards local tax-collectors (see Strategic Actors for Inclusive Development research project at the African Studies Centre, Leiden). So, as – in particular in the informal economy – the lines between workers and employers become blurry, the paths along which African workers and employers organize, likewise, are not well delineated. Consequently, assuming that workers’ organizations per definition cannot and do not represent the interests of SMEs in Africa does not hold true.

What then constitutes the roles of workers’ organizations in promoting SME growth in Africa?

In Ghana, workers’ organizations such as, The Ghanaian Trade Union Congress (TUC-Ghana), the Council of Informal Workers Associations (CIWA) and Informal Hawkers and Vendors Association of Ghana (IHVAG), have developed interesting strategies towards supporting SMEs.

SMEs constitute an important part of Ghana’s economy, accounting for around 90% of all businesses in 2013, 85% of employment in manufacturing in 2010 and 49% of GDP in 2012 (Oxford Business Group, 2014). However, despite the apparent importance of SMEs for Ghana’s development, both in economic and employment terms, the Ghanaian government’s strategies towards promoting SME growth have been ambiguous. On the one hand, they acknowledge the significance of SMEs and have initiated programmes to support their growth, most recently through the creation of a SME-fund with a pilot scheme that will deploy around $25 million in 2014 (Kunateh, 2013). On the other hand, the Ghanaian government’s economic policies are geared towards attracting foreign direct investment (FDI), creating a sound business climate for foreign firms (Mensah, 2014 in Ghanaweb) and modernizing its cities (Obeng-Oboom, 2012). These policies have increased inequality and, to a certain extent, have been  counterproductive for SME growth as they undermine an enabling environment for local – in particular  informal – business initiatives (Mensah, 2014 in Ghanaweb; Obeng-Oboom, 2012).

Against this backdrop, Ghanaian workers’ organizations play important roles on the micro-, meso- and macro-level, as catalysers for SME-development. On the micro-level, informal workers’ organizations, such as IHVAG, support informal small-scale businesses by providing accountancy trainings, capacity development programmes and raising awareness about workers’ rights and health and safety at work. IVHAG, for instance, has been informing it’s, over 6000, members on the benefits of joining the National Health Insurance Scheme and has been supporting the creation of rotating savings and credit associations in order to foster solidarity amongst SME owners and employees (WIEGO, 2014; (interview with IHVAG National Coordinator, Juliana Brown-Afari, February 2014). On the meso-level, CIWA functions as a platform for peer-learning. Workers and employees of SMEs can exchange best practices and support each other through sharing concerns and mutual experiences. The most visible efforts of workers’ organisations in Ghana towards SME development are occurring on the macro-level, where TUC-Ghana has been pressuring the government to adopt more inclusive economic policies, which respect SMEs, local markets and Ghanaian workers. In particular, they have been advocating for a more holistic approach towards SME growth in which strategies from different ministries complement each other (TUC-Ghana, 2013; TUC-Ghana, 2012).

In short, the above examples indicate that Ghanaian workers’ organizations, have significant roles to play as counterforces within adversarial political economies, supporters of local business initiatives and defenders of a more equitable socio-economic and political environment. 

Summary

  1. Workers’ organizations have been misrecognized in policy and academic debates on SMEs in Africa
  2. The assumption that SMEs fall under the enterprise category and should therefore be represented by employers’ associations does not hold true in many African countries
  3. Workers’ organizations can play an important role on three levels:
  • Micro level: providing training, capacity development, awareness raising
  • Meso level: peer-learning amongst owners and employees of SMEs
  • Macro level: lobby and advocacy of more inclusive economic policies which respect the rights of SMEs

Photo credit main picture: World Bank Photo Collection / via flickr

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About the author

Zjos Vlaminck

Zjos Vlaminck works as a research assistant and junior researcher at the African Studies Centre o...

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