Ghana Private Equity and Venture Capital Ecosystem Study
Private equity/venture capital was introduced in Ghana in 1991. In conjunction with this entry of a new asset class, the Government of Ghana (GoG) created a legal/ regulatory framework for VC funds in the early 1990s, regulated by the Bank of Ghana...
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| Language: | English |
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World Bank, Washington, DC
2018
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| Online Access: | http://documents.worldbank.org/curated/en/131791533060450579/Ghana-private-equity-and-venture-capital-ecosystem-study http://hdl.handle.net/10986/30165 |
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okr-10986-301652021-09-17T05:10:44Z Ghana Private Equity and Venture Capital Ecosystem Study World Bank Group PRIVATE EQUITY VENTURE CAPITAL GOVERNMENT INTERVENTION CAPITAL MARKET LEGAL FRAMEWORK REGULATION TAXATION REGISTERED FUNDS REGIONAL FUNDS ACCESS TO FINANCE PENSION FUNDS INDUSTRY ASSESSMENT LEGAL ANALYSIS Private equity/venture capital was introduced in Ghana in 1991. In conjunction with this entry of a new asset class, the Government of Ghana (GoG) created a legal/ regulatory framework for VC funds in the early 1990s, regulated by the Bank of Ghana. In late 1991, USAID sponsored a venture capital fund in Ghana, along with the Commonwealth Development Corporation (CDC). The initiative set up two companies, a non-bank finance company to hold the funds, the Ghana Venture Capital Fund (GVCF), and a separate management company, Venture Fund Management Company (VFMC), to make the investments. This initiative created the impetus for legal/regulatory framework for venture capital funds which was defined by the Financial Institutions (Non- Banking) Law of 1993, and “Draft Operating Guidelines for Venture Capital Funding Companies” which were published by the Bank of Ghana in 1995. Ghana is generally touted as an attractive investment destination on the continent because of its stable government and relatively strong business environment. However, there are also some market impediments specific to private equity/venture capital in Ghana. The country’s strong business environment is reflected in its ranking of 70th out of 189 countries in the 2015 World Bank Doing Business Study, above both Kenya (136) and Nigeria (170). However, Treasury bill rates in Ghana have been around 25 percent (91-day and 182-day), making it harder to justify investment in riskier and more illiquid alternative assets by domestic institutional investors. There has been significant depreciation (approximately 75 percent) in the Ghana cedi since the currency was redenominated in 2007 after the significant loss of value of the Second Cedi, which was advanced in 1967. This depreciation in the Ghana cedi has made business fundamentals unsupportive for investment. The objective of this study is to assess the private equity/venture capital (PE/VC) ecosystem in Ghana and to provide recommendations aimed at fostering a robust private equity and venture capital environment that can provide risk financing for competitive small and medium enterprises (SMEs). PE/VC firms are investment managers that mobilize fixed pools of capital to invest in a variety of companies, often across many industries. These firms typically comb the market for high potential investment opportunities through their network of intermediaries, and by developing business linkages and competencies in specific sectors. Apart from providing financing, PE/VC funds tend to take a “capital plus” approach, in that they help the companies in their portfolios to enhance management capacity, improve market focus and presence, strengthen governance, and manage growth. Although PE investment styles may vary considerably, many firms seek financial returns by supporting and financing the growth of the companies in their portfolios. As such, these firms are widely linked to job creation. 2018-08-08T19:46:43Z 2018-08-08T19:46:43Z 2016-06 Report http://documents.worldbank.org/curated/en/131791533060450579/Ghana-private-equity-and-venture-capital-ecosystem-study http://hdl.handle.net/10986/30165 English CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Economic & Sector Work :: Other Financial Sector Study Economic & Sector Work Africa Ghana |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
PRIVATE EQUITY VENTURE CAPITAL GOVERNMENT INTERVENTION CAPITAL MARKET LEGAL FRAMEWORK REGULATION TAXATION REGISTERED FUNDS REGIONAL FUNDS ACCESS TO FINANCE PENSION FUNDS INDUSTRY ASSESSMENT LEGAL ANALYSIS |
| spellingShingle |
PRIVATE EQUITY VENTURE CAPITAL GOVERNMENT INTERVENTION CAPITAL MARKET LEGAL FRAMEWORK REGULATION TAXATION REGISTERED FUNDS REGIONAL FUNDS ACCESS TO FINANCE PENSION FUNDS INDUSTRY ASSESSMENT LEGAL ANALYSIS World Bank Group Ghana Private Equity and Venture Capital Ecosystem Study |
| geographic_facet |
Africa Ghana |
| description |
Private equity/venture capital was
introduced in Ghana in 1991. In conjunction with this entry
of a new asset class, the Government of Ghana (GoG) created
a legal/ regulatory framework for VC funds in the early
1990s, regulated by the Bank of Ghana. In late 1991, USAID
sponsored a venture capital fund in Ghana, along with the
Commonwealth Development Corporation (CDC). The initiative
set up two companies, a non-bank finance company to hold the
funds, the Ghana Venture Capital Fund (GVCF), and a separate
management company, Venture Fund Management Company (VFMC),
to make the investments. This initiative created the impetus
for legal/regulatory framework for venture capital funds
which was defined by the Financial Institutions (Non-
Banking) Law of 1993, and “Draft Operating Guidelines for
Venture Capital Funding Companies” which were published by
the Bank of Ghana in 1995. Ghana is generally touted as an
attractive investment destination on the continent because
of its stable government and relatively strong business
environment. However, there are also some market impediments
specific to private equity/venture capital in Ghana. The
country’s strong business environment is reflected in its
ranking of 70th out of 189 countries in the 2015 World Bank
Doing Business Study, above both Kenya (136) and Nigeria
(170). However, Treasury bill rates in Ghana have been
around 25 percent (91-day and 182-day), making it harder to
justify investment in riskier and more illiquid alternative
assets by domestic institutional investors. There has been
significant depreciation (approximately 75 percent) in the
Ghana cedi since the currency was redenominated in 2007
after the significant loss of value of the Second Cedi,
which was advanced in 1967. This depreciation in the Ghana
cedi has made business fundamentals unsupportive for
investment. The objective of this study is to assess the
private equity/venture capital (PE/VC) ecosystem in Ghana
and to provide recommendations aimed at fostering a robust
private equity and venture capital environment that can
provide risk financing for competitive small and medium
enterprises (SMEs). PE/VC firms are investment managers that
mobilize fixed pools of capital to invest in a variety of
companies, often across many industries. These firms
typically comb the market for high potential investment
opportunities through their network of intermediaries, and
by developing business linkages and competencies in specific
sectors. Apart from providing financing, PE/VC funds tend to
take a “capital plus” approach, in that they help the
companies in their portfolios to enhance management
capacity, improve market focus and presence, strengthen
governance, and manage growth. Although PE investment styles
may vary considerably, many firms seek financial returns by
supporting and financing the growth of the companies in
their portfolios. As such, these firms are widely linked to
job creation. |
| format |
Report |
| author |
World Bank Group |
| author_facet |
World Bank Group |
| author_sort |
World Bank Group |
| title |
Ghana Private Equity and Venture Capital Ecosystem Study |
| title_short |
Ghana Private Equity and Venture Capital Ecosystem Study |
| title_full |
Ghana Private Equity and Venture Capital Ecosystem Study |
| title_fullStr |
Ghana Private Equity and Venture Capital Ecosystem Study |
| title_full_unstemmed |
Ghana Private Equity and Venture Capital Ecosystem Study |
| title_sort |
ghana private equity and venture capital ecosystem study |
| publisher |
World Bank, Washington, DC |
| publishDate |
2018 |
| url |
http://documents.worldbank.org/curated/en/131791533060450579/Ghana-private-equity-and-venture-capital-ecosystem-study http://hdl.handle.net/10986/30165 |
| _version_ |
1764471332878155776 |