Lack of permanent financing remains our greatest obstacle - VCTF (Victims of Crime Trust Fund)
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Funding a Futuristic Ghana: VCTF's plans for SMEs
Yaw Owusu-Brempong, the big cheese at the Venture Capital Trust Fund (VCTF), has spilled the beans on what's been holding his outfit back in its 17-year journey—a consistent, robust, and sustainable funding source. This issue, he says, has hobbled the fund's ability to fully serve its purpose as an alternative, patient financial source for small-to-medium-sized enterprises.
The VCTF, established back in 2004 with Venture Capital Trust Fund Act, 2004 (Act 680), was primarily meant to be capitalized by a 25 percent allocation from the National Reconstruction Levy. However, things didn't quite turn out that way. The fund has received a mere US$25million from the Reconstruction Levy before its termination in 2007, leaving it to depend heavily on sporadic and insufficient funding from the Ministry of Finance.
"With the financial sector clean-up and the ongoing pandemic, you can imagine how tight budgets have been," Owusu-Brempong admitted. Even so, the VCTF has managed to dish out a whopping US$110million to around 60 companies via seven funds.
New Horizons
But there's reason to feel optimistic, according to the VCTF CEO, as the fund anticipates disbursing an additional tranche of more than US$100million over the next five years. This windfall will come courtesy of a US$45million infusion from the World Bank through the Ministry of Finance-initiated Ghana Economic Transformation Project (GETP).
Delving deeper, he mentioned that the finish line for bringing in the funds is in sight, as the Venture Capital Fund Trust Board eventually will be inaugurated. He further explained that discussions are underway with the Ministry of Finance about teaming up under the Ghana CARES program, ensuring that once additional funding is secured, more investment managers can be empowered to lend a helping hand to businesses – paying special attention to those owned by the youth, women, and persons living with disabilities (PWDs).
Meanwhile, the Head of the Financial Service Division at the Ministry of Finance, Sampson Akligoh, revealed that the ministry plans to restructure the fund and place it under the GETP while integrating it with other essential institutions—such as the upcoming National Development Bank.
The Voice of the Industry
The Ghana Venture Capital and Private Equity Association (GVCPEA) has been formed with the mission of representing the industry, engaging government for crucial policy and regulatory frameworks required for the sustained growth of the venture capital and private equity scene in Ghana.
As you might have guessed, the VCTF plays a significant role in Ghana's economic transformation, shoring up investments in critical sectors like technology, agribusiness, healthcare, and climate resilience. With its impressive track record and influence spanning West Africa, the fund functions as a fund of funds vehicle, bolstering emerging investment managers in the region.
Future plans for the fund include teaming up with the Development Bank of Ghana under the 24-Hour Economy Policy, propelling capital access for SMEs, and boosting economic growth, innovation, and employment. All this is in line with President John Dramani Mahama's campaign promise ahead of the 2024 elections and underpins Ghana's broader economic development goals.
- Yaw Owusu-Brempong, the head of VCTF, has emphasized the need for a stable and substantial financing source for the fund to better serve small-to-medium-sized enterprises (SMEs).
- The Ghana Economic Transformation Project (GETP), with a US$45 million investment from the World Bank through the Ministry of Finance, is expected to provide additional funding for VCTF, amounting to more than US$100 million over the next five years.
- The venture capital industry in Ghana is represented by the Ghana Venture Capital and Private Equity Association (GVCPEA), which engages government for essential policy and regulatory frameworks to support the growth of the venture capital and private equity scene in Ghana.
- Growth in the SME sector is a key focus for VCTF, with plans to collaborate with the Development Bank of Ghana under the 24-Hour Economy Policy, mainly to improve access to capital, enhance economic growth, drive innovation, and create job opportunities.
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