Venture Capital supports SMEs with GH¢1.5bn

Yaw Owusu-Brempong — CEO, Venture Capital Trust Fund

The Venture Capital Trust Fund (VCTF) has started the disbursement of GH¢1.5 billion over the next five years to small and medium enterprises (SMEs) to enhance their operations, especially in the midst of the economic challenges.

The fund is targeting SMEs that are into food and agriculture, inclusive financial services, health care, education, manufacturing and industrial services.

Already, GH¢60 million has been released to three fund managers — Injaro Ghana Venture Capital Fund, Mirepa Capital SME Fund and Wangara Green Ventures — for onward lending to the first batch of beneficiaries.

The Chief Executive Officer (CEO) of the VCTF, Yaw Owusu-Brempong, in an interview in Accra last Friday, explained that the support to the SMEs followed the recapitalisation of the fund by the World Bank under the Ghana Economic Transformation Project.

He explained that the World Bank supported the fund with $40 million to invest in early-stage and transformational sectors of the economy.

In addition, he said, the bank provided a technical assistance facility of $5 million, which allows the fund to design some programmes for the development of the venture capital ecosystem.

“Over the next five years, we intend to deploy GH¢1.5 billion to support SMEs. With this amount, we intend to leverage about GH¢5 for every GH¢1 spent, thereby increasing the capital pool to SMEs to about GH¢7.5 billion.

“This is an ambitious plan and we call on all key stakeholders in the financial industry and international agencies to partner the fund to make this plan a reality,” he said.

Investment agreement

Giving further details, Mr Owusu-Brempong said the VCTF had signed an investment agreement with Mirepa SME Fund and Wangara Green Ventures to deploy GH¢35 million to SMEs in the country.

That, he said, had brought the total capital deployment towards SMEs finance to GH¢60 million in under two months this year.

“We intend to deploy about GH¢95 million by year-end,” he said.

Significant growth

The CEO noted that between 2006 and 2020, the VCTF committed about $25 million to seven funds.

“If you look at the fact that between 2006 and 2020 we have done a total of seven funds, and that this year alone we have done three, then that is a significant growth.

“We’ve committed roughly $25 million, but at different exchange rates because it is over a period of time,” he said.

Mr Owusu-Brempong said by the investments, the VCTF had demonstrated its willingness to back and build a talented group of young individuals who were able to combine industry and operational know-how with growth investment expertise to partner with SMEs.

Impact

He said the fund had, over the years, made successful investments in Joyce Ababio Fashion, the Axis Pension Fund, the African University College of Communications, Legacy Girls, the Rising Sun Montessori, Everpure Ghana, the Scientellect DNA Diagnostic Centre and Caltech.

“We are very selective in our choice of fund managers because venture capital investments are not about managing money; they are about managing several businesses at the same time. So you need skills that cut across from investment to entrepreneurship, leadership and a general understanding of the business environment and the kinds of support to give to businesses to thrive,” he said.

He said the VCTF would continue to support further development of the venture capital ecosystem through its technical assistance facility.

Mr Owusu-Brempong explained that the fund intended to use part of its technical assistance to build the capacity of the next generation of fund managers through newly developed flagship programmes.

“I believe if we continue to work together, we will get to our destination, which is having a vibrant venture capital ecosystem capable of deploying significant capital to SMEs across all the stages of their life cycle for the growth and development of our dear nation,” he added.