Only 28.2 per cent of micro enterprises surveyed in Ghana have transitioned fully from micro to medium scale, the Institute for Liberty and Policy Innovation (ILAPI) has found.

The finding means that fewer than three out of every 10 micro businesses in the study reached medium enterprise status.

The study covered 600 businesses, comprising 347 micro-enterprises, 155 small enterprises, and 98 medium enterprises.

Using the number of medium enterprises against the pool of micro enterprises, ILAPI calculated the full micro-to-medium transition rate at 28.2 per cent.

The study also found that 44.64 per cent of micro businesses transitioned to small enterprises.

ILAPI said the transition from micro to small took an average of about eight years, while the full transition from micro to medium could take between nine and 12 years.

It attributed the low transition rates partly to structural, financial and regulatory barriers.

The report said businesses encountered additional layers of compliance as they expanded, including new licences, tax registrations, approvals and permits.

It stated, for example, that a small factory seeking to expand could face requirements involving the Food and Drugs Authority (FDA), Metropolitan, Municipal and District Assemblies (MMDAs), Ghana Standards Authority and other regulatory agencies.

ILAPI stated that the regulatory burden discouraged some businesses from expanding beyond micro or small scale.

It said reducing duplicative requirements could significantly improve the transition of micro businesses into medium-scale enterprises and consequently increase employment.

The study noted that the most significant drop-off occurred between micro and small enterprises, where businesses faced limited capital and increasing regulatory requirements.