Globally, the data and narrative around effective private sector growth strategy is undergoing a significant shift away from big aid from foreign donors.
While affordable, patient capital remains essential for small and growing businesses, leading private capital, pension funds, and ecosystem builders are making the case for a collective commitment to investment diversification, allocation of domestic capital investment into the real economy and non-financial, market-building or ecosystem-building.
Private Equity Investments Boost Jobs, Taxes and Pensions
Ghana’s vast pool of patient capital, particularly from its pension funds, is increasingly being channelled into this strategy with leading firms like Enterprise Trustees, Stanbic Investment Management Services (SIMS) and Petra positioning their allocations to private equity and venture capital funds as a crucial diversification and risk management strategy.
A growing number of asset allocators from the pension industry are signing up to Ghana Venture Capital and Private Equity Association’s (GVCA) Pension Industry Compact, a high-profile advocacy campaign to drive up allocations from pension funds into private equity funds and other co-investment opportunities.
Joseph Ampofo, Managing Director (MD) of Enterprise Trustees, one of Ghana’s largest private pension companies, and one of the first trustees to have invested in private equity in 2017, said: “At Enterprise Trustees, we’ve always believed that smart investing can grow economies and communities”.
He continued: “That’s why we were among the first to commit to private equity, which is a powerful, diversified way to support small and medium-sized businesses (SMEs). These businesses are the heartbeat of our economy”.
Mr Ampofo added that they create jobs, spark innovation and drive local development. By investing in them, we’re aiming for strong financial returns and we’re helping build a stronger future for our nation, he emphasised.
“Private equity allows pension funds like ours to play a meaningful role in shaping the economy, driving local development and productivity, as well as creating salaried employment for our young people.
The decision to endorse GVCA’s Industry Compact and invest in this asset class is about putting money to work in places that matter most”, according to him.
Partnering With the Government
For the private capital industry, the challenge lies not just in sourcing capital but in ensuring a steady supply of “investment-ready” businesses.
Amma Gyampo, CEO of the Ghana Venture Capital and Private Equity Association (GVCA), emphasised the strategic role of pre-investment and non-financial market-building support at a recent SME Advisory and Investment Readiness Workshop hosted by GVCA in partnership with PwC and the Association of Ghana Startups.
She noted: “Our SME Advisory Programmes, Investment Readiness training, and structured Investor Matchmaking services are critical, non-negotiable elements of building a mature SME pipeline for our member investors”.
This work professionalises companies, de-risks deals, and creates the profitable opportunities our members demand, Madam Gyampo added.
“By leveraging the sophisticated technical investment expertise of private equity practitioners, there is an immense opportunity to boost the contribution of small, growing businesses to this economy with the right policy and stable, macro-economic environment”.
She assured: “GVCA is committed to being a strategic partner to the Government in its mission to drive job creation and business growth, ultimately creating the next generation of taxpayers and pension contributors through robust private sector investment.”
This approach demonstrates that active, hands-on development of the ecosystem is the most reliable way to secure sustainable growth and strong investment returns from the private sector.
Following the tragedy at El Wak stadium last week, which highlighted the scale of the mass unemployment crisis in this country, the government has a unique opportunity to engage pension and private equity industry leaders to unlock the human, social and financial capital that remains trapped within our borders
The growing local institutional investor commitments to private equity signal a decisive move toward a financial investment strategy that views impact solutions to mass challenges like Health, Education, Food Security and Financial Services or FinTech as core elements of superior financial returns, cementing the real sector’s critical role in Ghana’s economy.
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