Follow the SDG investing leader: Ghana

Ghana is world-leading when it comes to tracking spending on Sustainable Development Goals, making it ripe for impact investors. Krisztina Tora, market development director at the Global Steering Group for Impact Investment, on the growing momentum (and infrastructure) in one of the region's most popular destinations for impact finance.

West Africa’s most attractive country for impact investors, after Nigeria, is Ghana. Between 2005 and 2015, the volume of impact capital deployed in the country was US$1.69bn. Though more than 90% of the investment came from development finance institutions (specialised development banks or subsidiaries, such as the UK’s CDC Group or the African Development Bank), the number of impact investors operating in the country is steadily growing.

Speaking at the Ghana Impact Dialogue hosted by the GSG last year in Accra, R. Yofi Grant, CEO at the Ghana Investment Promotion Centre, spoke of ambitions to position Ghana “as the entry point to invest in Africa”. He added: “We are ready to embrace all investment ready to help Ghana achieve the SDGs while making a decent ROI.” The GIPC’s objective is to encourage, promote and facilitate investment in the country, and SDG investing will play an important role in achieving this goal.

What makes Ghana particularly interesting for investors is that it’s only the second country in the world (after Mexico) to do an SDG Baseline Report. This allows a granular understanding of where the country stands today on all 17 Sustainable Development Goals. Ghana is also the first country to completely change how its government’s budget is built and spent: it now tracks public expenditure towards the SDGs, and ensures transparent reporting and evaluation of progress. This is both a sign of transparency and accountability, but also a strong signal that the government takes SDG financing seriously and wants to attract private investors as partners on this journey.

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Engaging the private sector

The government is helping to finance the SDGs through the development of intermediary bodies. It established the Venture Capital Trust Fund (VCTF) in 2004 to support the private sector, especially SMEs, in becoming a partner in achieving national development goals. It was a pioneering approach to development investment – one that was later copied by the Nigerian government. Over three years, the government used 25% of a 2% tax on the profit of banks operating in the country to seed VCTF, starting operations in 2006 with $22.4m. Since then, VCTF has invested in 52 SMEs and six VC funds, leveraging further capital of $92m.

This is a strong signal that the government takes SDG financing seriously and wants to attract private investors

The following achievements of VCTF are worth highlighting:

  • VCTF has developed expertise in creating integrated agricultural value chains for smallholder farmers in remote parts of Ghana, providing not only capital but also capacity building and technical assistance.
  • The leaders of VCTF are passionate and committed to developing the impact market. They enabled the expansion of Ghana's VC industry, the creation of an angel investor network, a technical assistance programme that trains VC fund managers and other investment professionals, and most recently the launch of the national platform Impact Investing Ghana (IIGh).
  • VCTF will launch soon two new funds with World Bank funding:
    • The Start-up Catalyst Fund, a proposed $20m fund, will drive seed and very-early-stage funding to start-ups and SMEs with strong growth potential. It will focus on catalysing investments in the $25k-500k range, with a variety of equity, debt, or quasi-equity forms. It will capitalise a wide range of investment vehicles: not only traditional investment (venture capital) funds, but also seed funds, accelerators, angel funds and crowdfunding vehicles.
    • The Strategic Industries Fund, a proposed $20m fund, will provide capital and support for qualified investment funds that make investments in businesses operating in sectors relevant to Ghana’s economic transformation, such as agriculture, manufacturing and ICT.

Ghana's government is working on other innovative mechanisms to achieve the SDGs. Two examples are worth mentioning:

  • The Ministry of Education is collaborating with the Africa & Middle East Education Outcome Fund to launch a pilot Sustainable Learning Outcome Fund of $30m. This aims to improve learning outcomes for around 300,000 children, especially those who are not in school or are marginalised in some way.
  • The Ministry of Finance is working with partners to develop a government-subsidised Real Estate Investment Trust (REIT). It will allow thousands of households to access affordable housing. In Ghana, not only are property prices too high compared to standards of living, but mortgages are unaffordable for the vast majority of the population (average interest rates have been around 18% for more than a decade). The scheme will allow teachers and civil servants to benefit from affordable rent-to-own schemes.


Mobilising impact capital

Set up under the leadership of the Minister for Finance, Ken Ofori-Atta, Impact Investing Ghana (IIGh) was launched in June 2019. It is a private sector-led, membership organisation comprising leading players in Ghana's entrepreneurship and finance ecosystem. Its mandate is to create a more favourable environment for impact investment in Ghana, and to mobilise private capital to create impact.

Announcing IIGh, Mr Ofori-Atta said his government was “deeply committed to achieving the SDGs and driving change at scale to deal with challenges like climate change”. The platform’s creation was just the initial stage of starting to put Ghana on the map: “Once IIGh formally joins the global impact investment society and completes this foundational stage, we as government can support the work of Impact Investing Ghana by creating a regulatory environment for impact investment to thrive."

We calculate that Ghana can unlock $5bn by 2030 to finance the SDGs

IIGh will provide data and market intelligence to investors, strengthen the capacity of intermediaries, improve policies and design large-scale impact investment funds to unlock and attract capital from pension-fund and sovereign wealth funds.

IIGh has another important role: it was created as the country’s National Advisory Board (NAB), and joins more than 30 other national boards represented within the Global Steering Group for Impact Investment (GSG).

At GSG our goal is to drive more capital to impact, and we calculate that Ghana can unlock $5bn by 2030 to finance the SDGs. This would be enabled by the following allocations over time:  

  • 10% of government spending to outcomes-based procurement
  • 10% of pension funds, bank assets (including dormant bank accounts) and diaspora remittances invested for impact
  • 2% of large business profits used for impact investment

As has happened in other countries around the world, a NAB provides the basic infrastructure to accelerate such change.

More information is available in GSG’s Ghana report and Africa report. Watch this 3-minute film for more info about why impact investing is important for Ghana.

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Header photo: MoringaConnect supports Ghanaian farmers to grow drought-resistant and nutritent-rich moringa trees, and connects them to a global market for moringa-based oils, infusions and foods (photo credit: Ashley Ricks / True Moringa)