Publication: Ghana Private Equity and Venture Capital Ecosystem Study
Loading...
Date
2016-06
ISSN
Published
2016-06
Author(s)
Editor(s)
Abstract
Private equity/venture capital was introduced in Ghana in 1991. In conjunction with this entry of a new asset class, the Government of Ghana (GoG) created a legal/ regulatory framework for VC funds in the early 1990s, regulated by the Bank of Ghana. In late 1991, USAID sponsored a venture capital fund in Ghana, along with the Commonwealth Development Corporation (CDC). The initiative set up two companies, a non-bank finance company to hold the funds, the Ghana Venture Capital Fund (GVCF), and a separate management company, Venture Fund Management Company (VFMC), to make the investments. This initiative created the impetus for legal/regulatory framework for venture capital funds which was defined by the Financial Institutions (Non- Banking) Law of 1993, and “Draft Operating Guidelines for Venture Capital Funding Companies” which were published by the Bank of Ghana in 1995. Ghana is generally touted as an attractive investment destination on the continent because of its stable government and relatively strong business environment. However, there are also some market impediments specific to private equity/venture capital in Ghana. The country’s strong business environment is reflected in its ranking of 70th out of 189 countries in the 2015 World Bank Doing Business Study, above both Kenya (136) and Nigeria (170). However, Treasury bill rates in Ghana have been around 25 percent (91-day and 182-day), making it harder to justify investment in riskier and more illiquid alternative assets by domestic institutional investors. There has been significant depreciation (approximately 75 percent) in the Ghana cedi since the currency was redenominated in 2007 after the significant loss of value of the Second Cedi, which was advanced in 1967. This depreciation in the Ghana cedi has made business fundamentals unsupportive for investment. The objective of this study is to assess the private equity/venture capital (PE/VC) ecosystem in Ghana and to provide recommendations aimed at fostering a robust private equity and venture capital environment that can provide risk financing for competitive small and medium enterprises (SMEs). PE/VC firms are investment managers that mobilize fixed pools of capital to invest in a variety of companies, often across many industries. These firms typically comb the market for high potential investment opportunities through their network of intermediaries, and by developing business linkages and competencies in specific sectors. Apart from providing financing, PE/VC funds tend to take a “capital plus” approach, in that they help the companies in their portfolios to enhance management capacity, improve market focus and presence, strengthen governance, and manage growth. Although PE investment styles may vary considerably, many firms seek financial returns by supporting and financing the growth of the companies in their portfolios. As such, these firms are widely linked to job creation.
Link to Data Set
Citation
“World Bank Group. 2016. Ghana Private Equity and Venture Capital Ecosystem Study. © World Bank. http://hdl.handle.net/10986/30165 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Ghana Private Equity and Venture Capital Ecosystem Study(World Bank, Washington, DC, 2018-10)This paper discusses the landscape for private equity and venture capital financing in Ghana. It provides an overview of the private equity and venture capital market in the country, describing key players, including funds, fund managers, investors, and public sector entities. The paper provides an analysis of key market drivers and impediments, as well as legal, regulatory, and taxation drivers and impediments that affect Ghana’s private equity and venture capital industry.Publication Survey of the Kenyan Private Equity and Venture Capital Landscape(World Bank, Washington, DC, 2018-10)This paper discusses the landscape for private equity and venture capital financing in Kenya. It provides an overview of the private equity and venture capital market in the country, describing key players, including funds, fund managers, investors, and public sector entities. The paper provides an analysis of key market drivers and impediments, as well as legal/regulatory/taxation drivers and impediments that affect Kenya’s private equity and venture capital industry.Publication Private Equity and Venture Capital in SMEs in Developing Countries : The Role for Technical Assistance(World Bank, Washington, DC, 2014-04)This paper discusses the constraints for private equity financing of small and medium enterprises in developing economies. In addition to capital, private equity investors bring knowledge and expertise to the companies in which they invest. Through active participation on the board of directors or in partnership with management, private equity investors equip companies with critical improvements in governance, financial accounting, access to markets, technology, and other drivers of business success. Although private equity investors could help to create, deepen, and expand growth of small and medium enterprises in developing economies, the vast majority of private equity in such markets targets larger or more established enterprises. Technical assistance, when partnered with private equity, can unlock more investor commitments and considerably enhance the ability of small and medium enterprises in emerging markets to raise private equity capital. Technical assistance provides funding that allows private equity funds to extend their reach to smaller companies. Technical assistance can mitigate some level of risk and increase the probability of successful investments by funding targeted operational improvements of investee companies. Dedicated technical assistance facilities financed by third parties, such as development finance institutions, governments, or other parties, have emerged to fill this critical need. The paper discusses the provision of investment capital twinned with technical assistance, which is now more accepted by limited partners and general partners or fund managers and is becoming more of a market model for private equity finance focused on small and medium enterprises.Publication The Republic of Ghana : Selected Policy Issues(Washington, DC, 2012-06-30)Following the December 2010 start-up of the Jubilee Field, Ghana has begun receiving royalty and tax revenues from oil production. At peak production, Jubilee could generate over US$1 billion in annual revenues for Ghana, a figure that will constitute 3 percent of 2011 non-oil Gross Domestic Product, or GDP and 18 percent of total government revenue. Recognizing the critical role oil revenues will play in Ghana's economic development; government is increasingly focused on generating short-term and long-term forecasts of oil revenues as inputs to its planning and policy-making. Oil revenue forecasts are needed for budgeting, long-term and medium-term fiscal planning, tax policy, and a broad set of petroleum and energy sector policy decisions. The immediate focus is on predicting the revenues that will flow from Jubilee itself; however, the announcements of significant additional discoveries at Mahogany Deep, Enyenra, Tweneboa, Teak, Sankofa, Dzata, and Paradise suggest that long-term oil revenues could be derived from multiple sources. Oil revenue forecasting is not intrinsically difficult but attention to details is important. For Ghana, the most challenging implementation details will be the ones related to the start-up of oil production at Jubilee. Price volatility is an ever-present challenge to forecasters but there are accepted approaches for taking this into account. However, the key to a successful on-going revenue forecasting process is to develop defined responsibilities and routines for information sharing, consistent and realistic methods for forecast calculation, and clear communication and dissemination of assumptions and results.Publication Financial Sector Assessment Program : Nigeria - IOSCO Objectives and Principles of Securities Regulation(World Bank, Washington, DC, 2013-05)The regulatory framework for securities markets in Nigeria has improved markedly since the 2002 Financial Sector Assessment Program (FSAP), and particularly in the last five years. Since the adoption of the Investments and Securities Act 2007 (ISA) and the first set of rules and regulations of the Nigerian Securities and Exchange Commission (SEC), the regulatory framework has been further strengthened and expanded. The SEC cooperates both at the domestic and international level with its counterparts and other authorities. The SEC focuses on regulating the products offered to investors through extensive scrutiny of prospectuses for all securities, including collective investment schemes. An assessment of the level of implementation of the International Organization of Securities Commissions (IOSCO) principles in Nigeria was conducted from September 4 to 19, 2012 as part of the International Monetary Fund (IMF)-World Bank FSAP. The assessment was made based on the IOSCO objectives and principles of securities regulation approved in 2010 and the methodology updated in 2011. The IOSCO methodology requires that assessors not only look at the legal and regulatory framework in place, but also at how it has been implemented in practice. The Investments and Securities Tribunal (IST) provides a process for the resolution of securities markets related cases that do not have to be resolved in the regular court system. The purpose of the assessment is primarily to ascertain whether the legal and regulatory securities markets requirements of the country and the operations of the securities regulatory authorities in implementing and enforcing these requirements in practice meet the standards set out in the IOSCO principles. The assessment is to be a means of identifying potential gaps, inconsistencies, weaknesses and areas where further powers and/or better implementation of the existing framework may be necessary and used as a basis for establishing priorities for improvements to the current regulatory scheme. The assessment of the country's observance of each individual principle is made by assigning to it one of the following assessment categories: fully implemented, broadly implemented, partly implemented, not implemented and not applicable. The IOSCO assessment methodology provides a set of assessment criteria to be met in respect of each Principle to achieve the designated benchmarks.
Users also downloaded
Showing related downloaded files
Publication Global Economic Prospects, January 2024(Washington, DC: World Bank, 2024-01-09)Note: Chart 1.2.B has been updated on January 18, 2024. Chart 2.2.3 B has been updated on January 14, 2024. Global growth is expected to slow further this year, reflecting the lagged and ongoing effects of tight monetary policy to rein in inflation, restrictive credit conditions, and anemic global trade and investment. Downside risks include an escalation of the recent conflict in the Middle East, financial stress, persistent inflation, weaker-than-expected activity in China, trade fragmentation, and climate-related disasters. Against this backdrop, policy makers face enormous challenges. In emerging market and developing economies (EMDEs), commodity exporters face the enduring challenges posed by fiscal policy procyclicality and volatility, which highlight the need for robust fiscal frameworks. Across EMDEs, previous episodes of investment growth acceleration underscore the critical importance of macroeconomic and structural policies and an enabling institutional environment in bolstering investment and long-term growth. At the global level, cooperation needs to be strengthened to provide debt relief, facilitate trade integration, tackle climate change, and alleviate food insecurity.Publication Digital Progress and Trends Report 2023(Washington, DC: World Bank, 2024-03-05)Digitalization is the transformational opportunity of our time. The digital sector has become a powerhouse of innovation, economic growth, and job creation. Value added in the IT services sector grew at 8 percent annually during 2000–22, nearly twice as fast as the global economy. Employment growth in IT services reached 7 percent annually, six times higher than total employment growth. The diffusion and adoption of digital technologies are just as critical as their invention. Digital uptake has accelerated since the COVID-19 pandemic, with 1.5 billion new internet users added from 2018 to 2022. The share of firms investing in digital solutions around the world has more than doubled from 2020 to 2022. Low-income countries, vulnerable populations, and small firms, however, have been falling behind, while transformative digital innovations such as artificial intelligence (AI) have been accelerating in higher-income countries. Although more than 90 percent of the population in high-income countries was online in 2022, only one in four people in low-income countries used the internet, and the speed of their connection was typically only a small fraction of that in wealthier countries. As businesses in technologically advanced countries integrate generative AI into their products and services, less than half of the businesses in many low- and middle-income countries have an internet connection. The growing digital divide is exacerbating the poverty and productivity gaps between richer and poorer economies. The Digital Progress and Trends Report series will track global digitalization progress and highlight policy trends, debates, and implications for low- and middle-income countries. The series adds to the global efforts to study the progress and trends of digitalization in two main ways: · By compiling, curating, and analyzing data from diverse sources to present a comprehensive picture of digitalization in low- and middle-income countries, including in-depth analyses on understudied topics. · By developing insights on policy opportunities, challenges, and debates and reflecting the perspectives of various stakeholders and the World Bank’s operational experiences. This report, the first in the series, aims to inform evidence-based policy making and motivate action among internal and external audiences and stakeholders. The report will bring global attention to high-performing countries that have valuable experience to share as well as to areas where efforts will need to be redoubled.Publication Global Economic Prospects, June 2025(Washington, DC: World Bank, 2025-06-10)The global economy is facing another substantial headwind, emanating largely from an increase in trade tensions and heightened global policy uncertainty. For emerging market and developing economies (EMDEs), the ability to boost job creation and reduce extreme poverty has declined. Key downside risks include a further escalation of trade barriers and continued policy uncertainty. These challenges are exacerbated by subdued foreign direct investment into EMDEs. Global cooperation is needed to restore a more stable international trade environment and scale up support for vulnerable countries grappling with conflict, debt burdens, and climate change. Domestic policy action is also critical to contain inflation risks and strengthen fiscal resilience. To accelerate job creation and long-term growth, structural reforms must focus on raising institutional quality, attracting private investment, and strengthening human capital and labor markets. Countries in fragile and conflict situations face daunting development challenges that will require tailored domestic policy reforms and well-coordinated multilateral support.Publication The Container Port Performance Index 2023(Washington, DC: World Bank, 2024-07-18)The Container Port Performance Index (CPPI) measures the time container ships spend in port, making it an important point of reference for stakeholders in the global economy. These stakeholders include port authorities and operators, national governments, supranational organizations, development agencies, and other public and private players in trade and logistics. The index highlights where vessel time in container ports could be improved. Streamlining these processes would benefit all parties involved, including shipping lines, national governments, and consumers. This fourth edition of the CPPI relies on data from 405 container ports with at least 24 container ship port calls in the calendar year 2023. As in earlier editions of the CPPI, the ranking employs two different methodological approaches: an administrative (technical) approach and a statistical approach (using matrix factorization). Combining these two approaches ensures that the overall ranking of container ports reflects actual port performance as closely as possible while also being statistically robust. The CPPI methodology assesses the sequential steps of a container ship port call. ‘Total port hours’ refers to the total time elapsed from the moment a ship arrives at the port until the vessel leaves the berth after completing its cargo operations. The CPPI uses time as an indicator because time is very important to shipping lines, ports, and the entire logistics chain. However, time, as captured by the CPPI, is not the only way to measure port efficiency, so it does not tell the entire story of a port’s performance. Factors that can influence the time vessels spend in ports can be location-specific and under the port’s control (endogenous) or external and beyond the control of the port (exogenous). The CPPI measures time spent in container ports, strictly based on quantitative data only, which do not reveal the underlying factors or root causes of extended port times. A detailed port-specific diagnostic would be required to assess the contribution of underlying factors to the time a vessel spends in port. A very low ranking or a significant change in ranking may warrant special attention, for which the World Bank generally recommends a detailed diagnostic.Publication Global Economic Prospects, January 2025(Washington, DC: World Bank, 2025-01-16)Global growth is expected to hold steady at 2.7 percent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development—with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters. Against this backdrop, emerging market and developing economies are set to enter the second quarter of the twenty-first century with per capita incomes on a trajectory that implies substantially slower catch-up toward advanced-economy living standards than they previously experienced. Without course corrections, most low-income countries are unlikely to graduate to middle-income status by the middle of the century. Policy action at both global and national levels is needed to foster a more favorable external environment, enhance macroeconomic stability, reduce structural constraints, address the effects of climate change, and thus accelerate long-term growth and development.