Demand
for start-up funding as well as capital for business expansion remains high in
Ghana.
Local
manufacturers, especially, complain of high cost of credit at the commercial
banks to grow operations.
But
there are other funding opportunities for entrepreneurs and businesses, which
inherently place limited burden on business operators. Sources of equity financing
in Ghana include the Venture Capital Trust Fund and the Export Trade,
Agricultural and Industrial Development Fund (EDAIF).
Luv
Biz enquiries however suggest most entrepreneurs are reluctant to access such
funds for fear of sharing ownership with fund managers.
“It
has become a challenge for some of them [entrepreneurs]; we’ve had to go
through a process of going to fund a company, where we’ve given the company the
offer for them to turn it down, several times, because you are going to share
ownership,” noted Percival Ofori Ampomah, Head of Investments at the Venture
Capital Trust Fund.
Equity
financing often involves buying ownership and sharing in decision making at the
Board level of a company for a period of time.
The
Trust Fund is a government of Ghana backed private equity initiative providing
long-term funds and technical support to enable SMEs grow and expand
operations.
Since
2006, the Trust Fund has partnered with various private sector institutions and
invested in 46 SMEs across various sectors of the Ghanaian economy.
A
lot more local businesses are however least informed of such existing
opportunities.
Dr.
Kwaku Adu Aninkora, Chairman of the Ashanti Regional Advisory Committee of the
Ghana Employers Association, acknowledged it is difficult for local businesses
to raise capital without going in for equity financing.
He
is encouraging members to open up their books to such funding opportunities.
“They
are coming with about 70-80percent [of funding] and yours is to tope up with
the 20percent… we have come to a stage where we need to partner each other and
then move forward because no individual in Ghana can raise the needed capital
for his or her business and the interest rates of the local banks are killing,”
said Dr. Aninkora.
Meanwhile,
the Ghana Employers Association has initiated moves to provide guarantee for
members to access EDAIF.
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