A survey of the Ghanaian private equity industry and its contribution to private sector development

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The usefulness of private equity (PE) as a tool for stimulating private sector growth in an economy is a topic that, regrettably, does not feature prominently in the literature on Ghanaian development. However, private equity has the potential to contribute significantly to Ghanaian private sector development by providing affordable long term capital and business expertise to local firms. In 2004, the Government of Ghana, realizing the importance of PE in private sector reform, set up the Venture Capital Trust Fund to jump start the local private equity industry. Subsequently five local PE funds were setup while several foreign PE funds opened Ghanaian offices or invested remotely in Ghanaian businesses. Since 2007, when many of these funds begun operating in earnest, not much has been done by way of measuring the socio-economic impact of PE on the Ghanaian private sector by either academia or the corporate world. Similarly, little is known about the size of the Ghanaian PE industry or its current growth trajectory. It is by addressing these shortcomings in the literature that this paper seeks to contribute most to the body of knowledge on Ghanaian PE. To this end, this paper seeks to answer the question: What is the state of the Ghanaian PE industry and to what extent is it contributing to private sector development? The paper concludes that the PE industry, while still growing, is making a significant contribution to the development of Ghanaian businesses through the provision of capital and technical assistance. The paper however reveals that the Ghanaian PE industry is defective in its reluctance to provide start-up capital for local entrepreneurs.
Thesis submitted to the Department of Business Administration, Ashesi University College, in partial fulfillment of Bachelor of Science degree in Business Administration, April 2010
Ghana, private equity, funds, development