Policy Environment and Small and Medium Enterprises Investment in the Ghanaian Oil and Gas Industry

Michael Karikari Appiah, Bayu Taufiq Possumah, Nizam Ahmat, Nur Azura Sanusi


Policy environment particularly local content legislatures in most emerging economies where oil and gas are produced have become major development agenda of host countries and stakeholders alike. Apparently, efforts are made to enact local content legislature as a means of optimizing oil and gas benefits. Per contra, mixed results had been ascertained with regards to outcome of these policies. This study was conducted to determine how dimensions of policy environment impact on SMEs investment in the Ghanaian Oil and Gas Sector. This study relied on primary data and structured questionnaire to elicit data from 497 Ghanaian SMEs across different industries. Using explanatory research design and binominal regression model we found that Skills and expertise development policy, local workforce education policy, employment policy and macro-economic environment policy significantly increase the odd of SMEs investment in the Ghanaian oil and gas sector. However, technology transfer, research and development policies exert insignificant influence on SMEs investment decisions. This study has implications on oil and gas policy reforms, investment decisions and future research. Particularly we recommend replication of this study within other emerging economies.

Keywords: Ghanaian SMEs, Logit Model, Oil and Gas, Local Content Policy, Willingness to Invest

JEL Classifications: D02, O17, P31

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