VCTF Aims for Self-Sustainability by 2030, Seeks Additional $10 Million Annually from Government

The Venture Capital Trust Fund (VCTF) aims to achieve self-sustainability by 2030, as outlined by General Manager Percival Ofori Ampomah during a recent media briefing.

To meet this goal, the VCTF projects it will need an additional US$10 million annually from the government over the coming years.

Mr. Ampomah highlighted that the VCTF has already received US$40 million from the Ministry of Finance through the Ghana Economic Transformation Project (GETP) to establish new funds.

However, the long-term objective remains to secure a stable and permanent funding source to support small and medium-sized enterprises (SMEs) across the country.

He emphasized the need for legislative reforms to update the Venture Capital Trust Fund Act, which has become outdated after two decades. The current Act still refers to the National Reconstruction Levy, a funding source that has been repealed, underscoring the necessity for a comprehensive review.

“Our immediate goal is to revise the Act to better reflect the current economic landscape,” Mr. Ampomah stated. “Next year, we plan to engage policymakers to advocate for changes that will create a more sustainable funding framework for the trust fund. Without these reforms, our ability to attract and deploy capital effectively remains constrained.”

A significant challenge for the VCTF is the preference among foreign investors to base their funds in Mauritius rather than Ghana, resulting in a large portion of investment capital remaining offshore, despite targeting projects within the country.

Mr. Ampomah noted that 90 percent of these funds do not remain in Ghana, limiting their impact on the local economy.

He pointed out that the current structure of limited liability companies used for investments in Ghana is not well-suited for private equity.

To address this issue, the VCTF plans to introduce a more compatible investment vehicle next year, aiming to make Ghana a more attractive destination for private equity funds.

Research commissioned by the VCTF from 2019 to 2020 revealed that the demand for venture capital in Ghana far exceeds supply. The SME sector requires approximately US$15 billion to meet its financing needs, in stark contrast to the US$70 million currently available in venture capital funds.

Mr. Ampomah acknowledged this gap, stating, “We have less than 10 percent of the required capital. While it’s a long journey, we are making progress by engaging local investors, including pension funds, which have contributed US$15 million.”

He underscored the vital role of local investors in attracting foreign capital, as foreign investors often prefer to see significant local participation before committing funds. By leading with local investment, the VCTF aims to set an example and build confidence among potential investors, positioning itself as a catalyst in the investment landscape.

To enhance local capacity, the VCTF is running the Venture Capital Accelerated Analyst Programme, which trains fund managers and analysts in asset management. Now in its second year, this initiative addresses the shortage of qualified fund managers in Ghana.

“When capital is ready for investment, finding competent managers can be surprisingly difficult,” Mr. Ampomah noted. “We are training the next generation of fund managers to fill this gap.”

Additionally, the VCTF is actively involved in the Ghana Digital Acceleration Programme (GDAP), focusing on supporting digital startups and small businesses over the next five years. This reflects a strategic shift toward prioritizing digitalization and technology in their investment approach.

Mr. Ampomah outlined the future direction of investments, stating, “We will increasingly target sectors such as technology, AgTech, insurtech, and climate-related projects, aligning with the government’s strategic focus and tapping into significant growth potential.”