Frontier and Growth Markets | August 7, 2023

Local and global investors show up to finance small businesses in Ghana’s ‘missing middle’

Jessica Pothering
ImpactAlpha Editor

Jessica Pothering

ImpactAlpha, August 7 – Ghana’s $5 billion annual shortfall in capital available to small business owners is stunting badly needed economic growth. Mirepa Investment Advisors is among an emerging group of local private capital providers striving to support Ghana’s small business community with flexible growth capital.

The Accra-based small business finance fund manager, has raised about half of its target of 120 million cedi (roughly $10 million) from local investors, including Axis Pensions, CAL Asset Management Company Limited, Venture Capital Trust Fund, and Petra Trust. The fund will cut checks equal to $200,000 to $2 million in manufacturing and tech businesses supporting Ghana’s key economic sectors, focusing on businesses that are owned and led by women.

Institutional investors across Africa have historically preferred government securities to private funds like Mirepa because of perceptions of risk. “The recent default by the government on its debt obligations to local asset owners, especially pension funds, makes a strong case for diversifying away from government and investing in the productive sectors of the economy,” Mirepa’s Samuel Yeboah told ImpactAlpha.

Ghana’s national advisory board for impact investing, called Impact Investing Ghana, last year released a landscape report on the potential and need for catalytic capital to support Ghana’s small businesses.

British accent

Separately, the UK’s development finance institution, British International Investment, has stood up a new small business investment firm in Ghana, Growth Investment Partners. The Accra-based subsidiary will make revenue-based and other self-liquidating investments in local currency. Its target investment range is $500,000 to $5 million.

GIP is being led by Jacob Kholi, ex- of BII and Aureos Capital, a former BII company that was acquired by the now defunct Abraaj Group.

BII is seeding the new subsidiary firm with $50 million; it is looking to attract additional capital to the evergreen facility from both local investors and other DFIs.

BII’s Kwabena Asante-Poku told ImpactAlpha that the DFI plans to replicate the strategy in other African markets.

BII, formerly CDC Group (once for Colonial Development Corp.), has nearly $130 million worth of investments in Ghana. Its portfolio includes  larger private fund managers, like private equity firm African Capital Alliance, pan-African venture funds such as Novastar and TLCom, and commercial banks. None outside of GIP have a targeted focus on small businesses.

Asked if GIP and BII will engage with existing small business finance and impact ecosystem building initiatives, Asante-Poku said BII does so through its technical assistance facility, Ghana Investment Support Programme.