The British International Investment (BII), which serves as the United Kingdom’s Development Finance Institution, has revealed its plan to establish a new platform named Growth Investment Partners (GIP).
With a substantial commitment funding of US$50 million, the platform aims to extend support to 150 Ghanaian Small and Medium-sized enterprises (SMEs).
GIP will serve as an attractive alternative investment option, offering long-term and flexible loans ranging from US$500,000 to US$5 million in the local currency. This initiative is designed to address the pressing funding needs of local businesses effectively.
In addition to the financial assistance, SMEs availing themselves of GIP’s services will receive valuable support in the form of business support services and capacity building. These areas of support will encompass financial management, corporate governance, and environmental and social practices. The ultimate goal is to foster the growth of the sector in a sustainable, productive, and inclusive manner.
Mr. Chris Chijiutomi, the Head of Africa at BII, announced this significant initiative in Accra on Monday, expressing the belief that GIP will contribute significantly to overcoming SMEs’ key challenge of accessing adequate funding. Moreover, it is expected to unlock the economic potential within the country, stimulating growth and development.
“SMEs are important to the Ghanaian economy as they create jobs and make a significant contribution to the country’s gross domestic product.
However, they face many challenges with accessing growth capital through traditional funding sources including high interest rates, short-term loans, high collateral requirements and currency mismatches,” he said.
Mr. Chijiutomi, the Head of Africa at BII, stated that Growth Investment Partners (GIP) aims to collaborate with relevant stakeholders to offer funding through various financing options. These funds are intended to address the capital requirements, which are estimated to be around $4.8 billion, to support the economic reforms of local businesses in the country.
Chief Executive and Investment Officer (CEIO), Mr. Jacob Kholi, mentioned that GIP will provide investment tenors ranging from five years to 10 years, based on the specific needs of each business. This flexible approach ensures that businesses receive suitable financial support to meet their respective goals and objectives.
“GIP is not providing subsidised funding and will price its products to earn a risk-adjusted return with the Ghana Reference Rate (GRR) as the basis,” he said.
According to Mr. Kholi, Small and Medium-sized enterprises (SMEs) seeking qualification for GIP’s support must meet specific criteria. These include having a turnover equivalent to the local currency of up to US$15 million, total assets up to US$15 million in the local currency equivalent, and employing a workforce of between 10 and 300 individuals.
Furthermore, the business must be incorporated in Ghana, with its primary operations based in the country, and at least 50 per cent of its revenues generated from activities within Ghana.
Mr. Kholi also clarified that certain sectors, namely mining, oil and gas, as well as ammunition/hard liquor/tobacco, are excluded from the GIP initiative.
Chairman of Growth Investment Partners Ghana LTD, Mr. Albert Essien, emphasized the critical areas for productive, sustainable, and inclusive growth of SMEs, which include adhering to good corporate governance, environmental and social practices, and maintaining sound financial management practices.
To complement GIP’s operations, the BII introduced the Ghana Investment Support Programme, a technical assistance initiative that assists SMEs in becoming investment-ready and offers post-investment support.
Mr. Essien highlighted that the BII previously sponsored the establishment of the Ghana Venture Capital Fund (GVCF), a US$6 million fund, alongside various Ghanaian institutions and Direct Foreign Investment.
The GVCF was the first venture capital fund to be established in Sub-Saharan Africa, outside of South Africa, with BII playing a pioneering role at the time, similar to its current involvement with GIP.