"Venture Capital Trust Fund supported with $70m since establishment"

" Venture Capital Trust Fund supported with $70m since establishment \r\n\r\nThe Venture Capital Trust Fund (VCTF) has received US$70million in funding since its founding in 2006 \u2013 leaving a US$102million funding deficit in the aim to fulfil its objective of providing financing to the Small and Medium Enterprises (SMEs) sector.\r\n\r\nPrior to the World Bank\u2019s recapitalisation of VCTF under the Ghana Economic Transformation Project with US$40million and a US$5million technical assistance facility, assessments by Bolton Consulting Group (BCG) revealed that VCTF needed a minimum of\u00a0US$172million to carry out its purpose.\r\n\r\nIn an interview, the Chief Executive Officer of VCTF, Yaw Owusu-Brempong, stated that securing long-term funding sources is a top priority for the VCTF board.\r\n\r\n \u201cAt the board level, one of our major issues is a permanent source of funding. Because it\u2019s a revolving fund, either we get one large money \u2013 which is very difficult \u2013 and then we don\u2019t even go back to the ministry again, just like Development Bank Ghana; or on gradual basis, if for the next 10 years \u2013 if every year we are getting an additional US$10million \u2013 then after 10 years there will be no need to actually go back to the ministry. Because it doesn\u2019t make sense that every now and then government will pump money into the fund. \r\n\r\n \u201cWe keep returning because financial inflows haven\u2019t been steady, but if financing does start to flow steadily, as the BCG has advised, then there may come a day when we won\u2019t even need government support because we\u2019ll be able to stand on our own two feet,\u201d Mr. Owusu-Brempong said.\r\n\r\n \u201cThe VCTF needed minimum of US$172million per recommendations by the BCG, and over the years from 2006 to 2021 the total monies given to us was US$30million; so there was a gap of US$142million. Now in 2022, as a result of the recommendation, US$40million has been received under the Ghana Economic Transformation Project. This leaves the current fund gap at US$102million,\u201d the CEO revealed.\r\n\r\n VCTF commitments \r\n\r\nThe VCTF has committed about US$25million \u2013 at different exchange rates \u2013 to seven funds between 2006 and 2020; and GH\u00a260million in 2022 and an additional GH\u00a260 million by the end of 2022.\r\n\r\nOver the next five years, VCTF intends to deploy GH\u00a21.5billion to support SMEs. With this amount, we intend to leverage about GH\u00a25 for every GH\u00a21 spent; thereby increasing the capital pool for SMEs to about GH\u00a27.5billion.\r\n\r\n Cause of funding gap \r\n\r\nWhen the VCTF was set up in 2004 and started operations in 2006, the Fund was supposed to get 25 percent of the National Reconstruction Levy \u2013 mainly a levy on the banks and insurance companies, with seed money of about GH\u00a222million, equivalent to US$22million at the time.\r\n\r\n \u201cUnfortunately, in 2006 the levy was abolished \u2013 and that has been our biggest challenge,\u201d the CEO said.\r\n\r\n \u201cSo, our source of funding was the reconstruction levy and then allocation from the Ministry of Finance; but if the levy had been there, I\u2019m sure we wouldn\u2019t even have needed money from the Ministry of Finance. Unfortunately, it was abolished. So, subsequently, allocations from the Ministry of Finance were not consistent. There were some years we weren\u2019t getting anything at all, depending on the ministry\u2019s priorities,\u201d Mr. Owusu-Brempong stated."

"Venture Capital Trust Fund supported with $70m since establishment"

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