VCTF Launches New Fund to Drive 24-Hour Economy for SMEs
By Joshua Worlasi AMLANU
The Venture Capital Trust Fund (VCTF) plans to take a key position in the country’s economic shift by introducing a new fund designed to back enterprises that align with the government's 24-hour economy initiative, according to Michael Abbey, CEO of VCTF.
During the Ghana Venture Capital Trust Association’s (GVCA) annual conference held in Accra, the recently named CEO unveiled strategies for an anticipated support center aimed at small and medium-sized enterprises (SMEs). This fund is presently engaged in initial talks with the 24-Hour Economy Secretariat within the Office of the President. It aims to assist established companies looking to expand their operations and enhance efficiency.
"We are considering setting up a 24-hour economic fund specifically for small and medium-sized enterprises (SMEs). This initiative aims to assist companies that currently operate but wish to expand their business operations. Naturally, we have been discussing with the secretariat about ways to implement this plan," stated Mr. Abbey.
As part of its larger plan to strengthen Ghana’s venture capital and private equity landscape, the VCTF aims to enhance alternative funding options for small and medium-sized enterprises (SMEs). Mr. Abbey, who took charge just five weeks prior, highlighted the Trust Fund’s dedication to collaborating with various parties to foster employment opportunities and boost economic development.
In the last twenty years, VCTF has supported 14 fund managers who have gone on to invest in roughly 80 companies—resulting in approximately 30,000 job creations. The aim of VCTF is to boost the financial returns for their portfolio funds and assist these firms in attracting additional investment from external sources.
The CEO said that their investors aim to enhance fund managers' practices in areas such as ESG criteria, risk management, and value addition.
The anchor investments of the VCTF, which included first-loss positions when necessary, facilitated raising GHS 2 billion through 58 transactions. Eight funds have completed their closures, five continue with fundraising activities, and two fund managers have secured subsequent funding rounds. Additionally, the VCTF attracted domestic finance from various sources such as banks, pension funds, and insurance companies. It also assisted all 13 funds in improving operational efficiency and strengthening risk management practices.
The CEO mentioned that some of these firms have since left the fund’s portfolio, and numerous others have started contributing taxes to the state, which supports Ghana’s developmental objectives.
"We are undertaking these efforts with the expectation and excitement that we can contribute to building Ghana’s venture capital and private equity sector, which aims to support small enterprises financially, generate employment opportunities, and foster economic growth within the country," he stated.
Mr. Abbey further disclosed intentions to introduce two more funds, one of them being the planned Ejumera Fund aimed at backing enterprises in technology, agricultural technology, as well as those owned or headed by women. This initiative aligns with governmental instructions to redirect investments towards tangible sectors rather than relying heavily on government bonds and securities.
Frederick Amissah, a technical advisor at the Ministry of Finance, echoed government’s support for the trust fund – noting its evolving role in channeling capital toward high-impact sectors. He said Ghana’s financial architecture is being repositioned to back productive enterprises rather than merely absorbing public debt.
"We are attempting to utilize fiscal policy to guide investment managers away from government securities and towards the economy’s actual sectors," stated Mr. Amissah.
“That includes partnering with institutions like yours to support businesses, create the jobs we need and deliver the growth we are all looking for,”he added.
This step is consistent with the ministry's overall strategy to utilize various alternate investment avenues like pension funds and private capital to broaden the financing options available to enterprises.
Mr. Amissah recognized the typical challenges faced by small and medium-sized enterprises (SMEs) when trying to obtain bank loans and stated that venture capital should be emphasized as a solution to bridge this funding gap.
"The saying goes: if we don't generate the revenue, we can't claim ownership of those funds. We view this project as essential for boosting efficiency," he added.
VCTF aims to enhance its internal processes, increase the capabilities of its fund managers, and introduce its Fund Management Development Program. This initiative encompasses hiring and educating participants through the Venture Capital Analyst Program, with recent efforts including the graduation of 20 analysts as part of their strategy for developing talent.
The recently published impact report from the trust fund celebrates its 20-year anniversary and details both accomplishments and future objectives. This document examines VCTF’s two-fold mission—to supply long-term funding via fund administrators and to foster the development of a venture capital environment in Ghana.
Provided by Syndigate Media Inc. ( Syndigate.info ).