The State of Venture Capital and Private Equity in Ghana: Unveiling the Future

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The State of Venture Capital and Private Equity in Ghana: Unveiling the Future

Introduction: The venture capital (VC) and private equity (PE) landscape in Ghana has evolved significantly over the past three decades. This comprehensive report, “The State of Venture Capital and Private Equity in Ghana, 1991–2023,” provides an in-depth analysis of the market’s growth, challenges, and opportunities.

Here are the most compelling insights and statistics that highlight the sector’s trajectory and potential.

Market Growth and Investment Trends:

• Dramatic Increase in Funds: Between 2008 and 2023, the number of fund management companies in Ghana grew from 6 to 68, managing 72 funds, marking an 11-fold increase.
• Assets Under Management (AUM): The AUM of VC/PE funds have seen an average annual growth rate of 23%, reaching $6.93 billion in 2023, with regional African funds holding 78% of the total AUM. The State of VC and PE in Ghana, page 20
• Top Sectors: The most funded sectors were financial services, healthcare, and ICT, receiving 85% of the total invested capital. 

Impact on Employment and Gender Diversity:

• Job Creation: VC/PE-backed businesses created over 44,000 direct jobs by 2023, with women making up 54% of the workforce. The State of VC and PE in Ghana, page 51
• Gender Representation: While women hold 36% of senior investment roles, they only account for 11% of investment committee members, highlighting a gap in gender diversity. 

Challenges and Opportunities:

• Underutilized Pension Funds: Despite a 25% cap on pension fund allocations to alternative investments, less than 1% of Ghanaian pension fund assets are invested in VC/PE due to high returns from government securities and limited understanding of VC/PE investments. 
• Gender Lens Investing: A mere 11% of deal volume between 2009 and 2023 went to women-focused businesses, indicating a significant underinvestment in gender lens investing. T

Strategic Insights:

• Need for Gender Policies: With 97% of funds lacking a formal gender policy, there is an urgent need to establish clear commitments to gender diversity and inclusion.
• Enhancing Pension Investments: To stimulate pension fund investments in VC/PE, there is a need for better education on VC/PE benefits, alongside the creation of institutional-grade investment vehicles.

 

 

I Have Questions Based on The Report

1. Market and Growth:
   • With the VC/PE market in Ghana growing at an average annual rate of 23%, what strategic initiatives can further accelerate this growth and attract more local and international investors?
2. Utilization of Pension Funds:
   • Given the high growth of pension assets, why do Ghanaian pension funds still under-invest in VC/PE, and what policy changes are needed to encourage greater participation?
3. Gender Diversity:
   • Despite women constituting 54% of the workforce in VC/PE-backed companies, why is there such low representation of women in investment decision-making roles, and what actions can address this imbalance?
4. Impact on SDGs:
   • How can Ghana’s VC/PE sector increase its contributions to underfunded SDGs, particularly climate action (SDG 13), to ensure comprehensive sustainable development?
5. Exit Challenges:
   • What are the primary barriers to successful exits in Ghana’s VC/PE market, and how can these be mitigated to ensure better returns for investors?

For a detailed understanding and further insights, delve into the full report here.