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The British International Investment (BII), a development finance institution of the United Kingdom (UK) and impact investor, has committed $50 million to provide flexible and patient capital to support Ghanaian small and medium enterprises (SMEs) to be more efficient for economic growth.
The capital is made possible through the Growth Investment Partners (GIP) Ghana, a new vehicle of the BII designed to provide long-term financing for small businesses and help address significant gaps and barriers to unlock the economic potential of the country.
It will provide between $500,000 and $5 million equivalent in local currency to 150 SMEs through various financing options that meet the needs of local businesses and are otherwise not available in the market.
Launching the new entity in Accra yesterday (July 31), the Managing Director (MD) and the Head of BII Africa, Chris Chijiutomi, noted that SMEs occupied a critical role in the Ghanaian economy and accounted for over 90 per cent of businesses in the country.
He said the SME sector contributed nearly 60 per cent of the country’s gross domestic product (GDP) and 80 per cent of all employment and despite the sector’s importance to the Ghanaian economy, the SME financing gap was estimated at $4.8 billion, which was one of the largest in Africa.
He stated that SMEs faced many challenges with accessing growth capital through traditional funding sources, including high-interest rates, short-term loans, high collateral requirements and currency mismatches.
“Compounded by a challenging macroeconomic environment, SMEs in the country need access to long-term growth capital and business support designed to boost their growth, create jobs and deepen their contributions to the Ghanaian economy,” he said.
The BII Africa head said it was for that reason that the BII created the GIP as a unique and lasting solution to become a true long-term partner for Ghanaian businesses.
He said the GIP was led by a highly experienced team of Ghanaian investment professionals, including Albert Essien as Chair and Jacob Kholi as the Chief Executive and Investment Officer (CEIO), to support the growth of SMEs in the country.
He added that the GIP would focus on adding value beyond capital by providing business support services that helped businesses institutionalise and improve corporate governance and environmental and social practices.
Jacob Kholi observed that GIP would help to address a critical gap in accessing finance for SMEs that were the lifeblood of the Ghanaian economy but struggle to raise adequate and appropriate finance required to grow.
He said the firm was designed to offer differentiated growth capital to SMEs through a simple menu of financial products that were tailored to meet their growth needs.
GIPs investment tenor of the loan is between five years to 10 years depending on the needs of the business.
Albert Essien noted that to complement the operations of GIP, BII had established a technical assistance programme to provide technical support to SMEs to make them investment ready, as well as post-investment support.
He expressed hopefulness that SMEs would take advantage of this unique opportunity to embrace and work with GIP in a transparent, fair and honest manner for their mutual success.
“The Board of GIP under my chairmanship, together with management, will work hard to ensure that this innovative financing model delivers on its mandate and become an integral part of the SME financing ecosystem in Ghana,” he said.
