The British International Investment (BII), the UK’s development finance institution (DFI) and impact investor have collaborated to launch Growth Investment Partners (GIP) Ghana
The new platform, which will be funded by a US$50 million contribution from BII (previously known as CDC Group plc), will provide long-term flexible funding to small and medium-sized firms (SMEs) in the West African country, mostly in local currency.
The news comes as the Foreign Secretary makes a four-day trip across Africa to reaffirm the UK’s commitment to boosting long-term economic growth in Africa.
SMEs play an important role in the Ghanaian economy, accounting for more than 90% of business enterprises, 60% of the country’s GDP, and 80% of all employment. Despite its importance to the Ghanaian economy, the SME funding deficit is projected to be US$4.8 billion, making it one of Africa’s largest.
Accessing growth capital through traditional lending channels presents numerous problems for SMEs, including high interest rates, short-term loans, stringent collateral requirements, and currency mismatches. Compounded by a difficult macroeconomic climate influenced by the worldwide pandemic and geopolitical conflicts, SMEs in Ghana require long-term growth capital and business support to increase their growth, create jobs, and deepen their contributions to the Ghanaian economy.
BII has created GIP as a unique and lasting solution that is not limited by typical fund investment horizons, which will enable the company to become a true long-term partner for Ghanaian businesses to fuel their growth. Furthermore, it is designed for investments from local institutional investors, contributing to the expansion of the capital market in Ghana and scaling GIP’s impact.
GIP will provide capital to SMEs of US$500k – US$5m, equivalent in local currency, through flexible financing options that meet the needs of local businesses and are otherwise not available in the market. The company will support up to 150 Ghanaian SMEs within the next 15 years.
The company, complemented by BII’s new technical assistance facility, Ghana Investment Support Programme, will also look to add value beyond capital by providing business support services and capacity building in areas of financial management, corporate governance and environmental and social practices, enabling the SME sector to grow in a productive, sustainable and inclusive way.
As part of his visit to three African countries including Ghana, the Foreign Secretary, James Cleverly said: “I want the UK to be increasingly driving future-focussed, mutually beneficial partnerships with African countries operating in the world’s largest free trade area. From investments in clean energy, to companies turning waste products into fashion items, there is so much potential for economic growth across Africa. With the UK-African Investment Summit to be hosted in London in April next year, we are looking to strengthen our business links and grow our economies together. By investing in companies in Ghana today, we are investing in jobs and growth for the future.”
British High Commissioner to Ghana, Harriet Thompson added: “Ghana’s long-term economic success matters to the UK, that is why together with the BII we are supporting the SME businesses that are vital to the country’s sustainable economic reform. GIP will bridge the critical gap between these businesses and access to finance. This new platform, a global first for BII, will directly meet the needs of Ghana’s economy, increasing the opportunities needed to create jobs and support inclusive growth across the country.”
Commenting on the launch of Growth Investment Partners (GIP) Ghana, Chris Chijiutomi, MD and Head of Africa, BII said: “BII has been a strategic partner to Ghanaian businesses for 64 years. We are thrilled to bring GIP, a unique and first-of-its-kind platform, to Ghana and we are confident that it will become a valuable and long-term partner to the country’s SMEs. Our ambition is to scale GIP across other countries in the continent where there is a need to provide long-term flexible growth capital to African SMEs.”
Kwabena Asante-Poku, Coverage Director for Ghana, BII, noted: “We are excited to support the growth ambitions of investment-ready SMEs in Ghana. The launch of GIP in Accra is a testament both to our long-term commitment to the country and our conviction that supporting talented Ghanaian entrepreneurs is the most effective way to deliver transformative impact at scale.”
Experienced Ghanaian investment professionals with a solid track record in Africa will run GIP. Jacob Kholi, Chief Executive and Investment Officer, GIP Ghana, said: “Enabling financial inclusion for Ghanaian SMEs is critical to drive economic growth across the country. With BII’s support, we hope to deliver on this ambition to unlock potential. We believe GIP will be transformative in responding to Ghanaian SMEs’ financing needs, and we look forward to supporting their ambitions to expand, innovate, and drive a sustainable, inclusive economic growth that benefits people in Ghana.”
The investment contributes to the United Nations’ Sustainable Development Goal 8 (SDG 8) – Decent Work & Economic Growth.