Small firms encounter the following problems in their efforts to raise capital in the Ghanaian financial market:

• The high cost of obtaining a quotation on the stock market. For most small firms, a quotation has become impracticable.
• Large firms are better known and provide more financial information than smaller firms.
• The accounting system in large firms is more sophisticated and is able to provide a greater quantity of more reliable information which can be incorporated into annual reports or profit forecasts.
• Investments in larger companies are more easily marketable.
• The smaller business will find it particularly difficult to attract venture capital.
• Small firms tend to lack the financial expertise to prepare adequate cash flow projections or proper forecasts.
• The cost of finance to small firms will probably be higher than that for large businesses. In order to attract capital in the first place, the small firm may be forced to pay a greater rate of interest.
• Some government-supported schemes (e.g., agricultural loan guarantee scheme) specify minimum qualifying levels which exclude the smaller firms.

(Any 5 points for 10 marks)