Govt backs venture capital for SMEs

The Ministry of Finance has pledged full government support to the burgeoning venture capital ecosystem, describing it as a critical financial vehicle that is key to achieving the country’s development goals especially, under the African Continental Free Trade Agreement (AfCFTA).

Speaking on behalf of the Minister for Finance, Dr Cassiel Ato Forson, at the launch of the Ghana Venture Capital and Private Equity Compact in Accra, a senior member of the Ministry, Fredrick Asiamah, hailed the Compact and said it had laid the foundation for how alternative investments should shape the country’s financial future.

“It has charted a path and laid the foundation for how players behave and how fair deals are struck in the venture capital space. The government is fully committed to supporting the VCTF in achieving its mission,” he said.

Economic transformation

Mr Asiamah reiterated the government’s recognition of Small and Medium Enterprises (SMEs) as part of Ghana’s economy, mirroring the German model where structured and well-capitalised SMEs drive a powerful industrial base. 

He emphasised that long-term funding for SMEs had often been elusive due to rigid financial structures, but the rise of venture capital provides a compelling alternative.

“Banks have not always been fit for purpose when it comes to financing SMEs, due to steep collateral requirements. Venture capital offers a fresh avenue, providing not only funds but also expertise and innovation support,” he said.

Mr Asiamah called for greater collaboration between the government and the private sector to scale initiatives such as the National Venture Capital Trust Fund (VCTF), and to ensure funds reach the real sectors of the economy. 

He also revealed plans to launch new government-backed initiatives such as Feed Ghana and the Nkokonkitinkitin Poultry Project, with the promise of future engagement with stakeholders for support.

Future collaborations

The Finance Ministry assured stakeholders that the government’s doors are wide open for collaboration. 

He urged fund managers, entrepreneurs and ecosystem players to engage with the Ministry as partners in national development.

“The creative juices of our entrepreneurs need the right financial support, the right knowledge transfer and the right tools to thrive. 

The Compact offers a path for Ghana’s development through impactful and innovative funding,” he said. 

Industry readiness

It calls on pension and insurance fund managers to allocate five per cent of their assets under management into venture capital and private equity by 2026. 

Currently, only 0.58 per cent of pension assets are invested in alternative assets, despite the regulator allowing up to 25 per cent.

This new commitment could see billions redirected into innovative businesses, especially in sectors with high growth potential.