The Minister of Communication, Digital Technology and Innovations, Samuel Nartey George, has called for a fundamental shift in the way financial institutions fund the country’s technology sector.
He said financing for technology companies could not continue to be structured in the same manner as funding for factories, farms and conventional businesses because ICT businesses required financial instruments specifically designed around their unique needs.
“Data centres, cloud infrastructure, cyber security capacity, homegrown software, business process outsourcing, a new generation of technology enterprises, none of that gets built on fibre alone. It gets built on capital. Capital that understands the economics of technology, not the economics of a factory or a farm,” he explained.
Mr George was speaking at an ICT Roundtable organised by the organised by the Development Bank Ghana (DBG) in Accra last Thursday.
The discussion was on the theme; “From Connectivity to Capital: Unlocking Finance for Ghana's ICT Sector” and brought together stakeholders from both the technology and finance industries as well government officials and regulatory agencies in the two sectors.
The event was also used to launch DBG’s Farmer Innovation, a WhatsApp-based Al assistant that would bring instant, locally validated agricultural advice to smallholder farmers, extension officers, and loan officers.
Dubbed; “BoaMi”, it was created in partnership with Opportunity International and Ghana Incentive-Based Risk Sharing System for Agricultural Lending (GIRSAL).
It is to significantly increase crop yields, optimise resource efficiency, reduce travel times, and boost overall productivity throughout the country’s vital agricultural sector.
Tailored funding
Mr George said while the country had made significant progress in broadband, fibre connectivity, mobile money and digital public services, connectivity alone could not deliver a prosperous digital economy.
“Start-ups need financing that matches their various stages, because start-ups are in different stages, not a one-size-fits-all product built for a different economy.
Telecoms, broadband, fibre data centres, cloud, cyber security, software, BPO, FinTech, technology-enabled services and enterprises.”
“These businesses will not be financed with instruments that are built for factories or farms or regular businesses.
If Ghana wants a 21st century digital economy, we need 21st century financing to match it, and that cannot be a slogan,” he said.
The minister said the government was working on stronger regulatory frameworks to give investors confidence, while allowing innovators room to experiment and disclosed that his ministry was working on a comprehensive review legislation covering areas including data, cybersecurity, telecommunications, startups, innovation and digital economy financing.
DBG as catalyst
The Chief Executive Officer (CEO) of Development Bank Ghana (DBG), Professor Randolph Nsor-Ambala, said the bank was positioning itself as a catalyst for innovation rather than a competitor to players in the country’s technology and financial ecosystem.
He said DBG intended to work closely with fintech companies to develop financial products that neither the bank nor the innovators could build independently.
Prof. Nsor-Ambala said DBG was also seeking to address the information and understanding gaps between technology entrepreneurs, banks and investors, particularly around the cost of capital, business valuation and what makes a technology company financeable.
He said good Ghanaian technology companies should not be discounted because investors and financial institutions lacked sufficient understanding of their businesses.
DBG, its CEO said, was also working with policymakers on digital public infrastructure and data interoperability to enable lenders to obtain a clearer picture of businesses before making financing decisions.
Prof. Nsor-Ambala said the bank would use the roundtable to identify and test practical financing mechanisms, including determining pricing, information requirements and the conditions that would enable financial institutions to support technology businesses.
