Financial Institutions and Private Equity Investors Seek Objectives from Minister of Finance's Mid-Year Assessment of Budget
In the heart of West Africa, Ghana is making significant strides towards fostering a conducive environment for economic growth and development. On July 24th, Dr. Ato Forson, the Ghanaian Minister of Finance, is scheduled to deliver the mid-year budget review, a pivotal moment that promises to reshape the nation's investment landscape.
The review, with a focus on macroeconomic stability, regulatory reforms, and promoting domestic capital investment, aims to consolidate fiscal discipline, enhance regulatory frameworks for better capital flow management, and stimulate domestic investment through infrastructure development and supportive economic policies.
One of the key areas of focus is the implementation of the Limited Partnerships (LP) Act, which provides a familiar and robust legal framework for private equity and venture capital fund structures, aligning Ghana with international best practices. Having an LP option under the Office of the Registrar of Companies will make Ghana a more competitive jurisdiction for private equity funds.
For macroeconomic stability, the government has reported significant progress. A reduction in total public debt by GH¢113.7 billion has lowered the debt-to-GDP ratio from 61.8% to 43.8%. Maintained unchanged projections for GDP growth at 4%, non-oil GDP growth at 4.8%, and end-year inflation at 11.9% underscore the government's commitment to fiscal discipline.
Regarding regulatory and policy reforms that support domestic capital allocation, the government has implemented robust budget and public financial management reforms. The Ghana Electronic Procurement System (GHANEPS) was fully integrated with the Ghana Integrated Financial Management Information System (GIFMIS), enhancing transparency and efficiency in public procurement and spending. Adjustment of electricity tariffs and tighter monetary policy were also key reforms to stabilize the economy.
To promote domestic capital investment opportunities and enterprise growth, the government is focusing on boosting revenue generation and completing critical infrastructure projects to create an enabling environment for private sector expansion. Emphasis is placed on sustaining early positive economic signs to unlock widespread opportunities for domestic investors and enterprises.
The formalization of more businesses and the growth of existing ones through the 24-hour Economy and industrialization will widen the tax net, capturing more economic activity. The priority areas for private equity capital investors and institutional investor trustees include macroeconomic stability, regulatory and policy reforms for domestic capital allocation, and industrialization initiatives.
Stakeholders such as institutional trustees and private equity investors have highlighted expectations for the budget to reinforce macroeconomic stability, implement regulatory reforms facilitating domestic capital allocation, and promote investment opportunities to catalyze enterprise growth.
The National Pensions Regulatory Authority (NPRA) has reaffirmed guidelines and reporting requirements for pension funds, aiming for a 5% allocation to alternative investments like private equity and venture capital by 2026. This could unlock over GH¢5 billion, shifting pension funds from primarily passive, short-term government debt instruments to long-term, growth-oriented private sector investments.
Private equity capital investors and institutional investor trustees are focusing on specific policy announcements in the review, such as tax incentives, discounted night-time electricity tariffs, and streamlined regulatory processes being proposed for businesses adopting 24/7 operations as part of the 24-hour Economy policy.
By directing a small percentage of pension funds into private enterprises, the budget will facilitate the growth of key sector businesses, increasing their profitability and corporate income tax contributions. This, in turn, will create decent, sustainable jobs across various sectors, contributing to Ghana's economic growth and development.
In summary, Ghana’s mid-year budget review aims to consolidate fiscal discipline, enhance regulatory frameworks for better capital flow management, and stimulate domestic investment through infrastructure development and supportive economic policies without requesting supplementary funding. The upcoming review is a promising step towards transforming Ghana into a hub for private equity and venture capital investments, aligning with international best practices and fostering sustainable economic growth.
- Dr. Ato Forson, Ghana's Minister of Finance, aims to reshape the nation's investment landscape by focusing on macroeconomic stability, regulatory reforms, and promoting domestic capital investment.
- The government's initiative to implement the Limited Partnerships (LP) Act will make Ghana a more competitive jurisdiction for private equity funds, aligning with international best practices in wealth-management.
- Private equity capital investors and institutional investor trustees have highlighted expectations for the budget to reinforce macroeconomic stability, implement regulatory reforms facilitating domestic capital allocation, and promote investment opportunities to catalyze enterprise growth.
- By directing a small percentage of pension funds into private enterprises, the budget will facilitate the growth of key sector businesses, contributing to Ghana’s economic growth and development, and creating decent, sustainable jobs across various sectors.
