UK’s development finance institution, the British International Investment (BII) has announced the launch of the Growth Investment Partners (GIP) Ghana, a first-of-its-kind company aimed at revolutionizing SMEs funding in the West African country.
The announcement, coming amid UK’s Foreign Secretary James Cleverly’s visit in Ghana, is set to benefit SMEs in the country which often face constraints in accessing funding.
According to officials, BII will provide up to $50 million dollars towards the actualization of the GIP funding model.
In addition, the model will enable Ghanaian SMEs to access long-term growth capital in the local currency as a way to address challenges faced by entrepreneurs in terms of currency mismatch and high collateral requirements associated with short-term loans.
What’s more, GIP will allow local institutional investors to invest hence contributing to the expansion of the capital market in Ghana.
Moreover, BII confirmed that the new model will look to support up to 150 businesses in the next 15 years with capital of between $500k and $5 million.
“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,” the statement read in part.
Furthermore, to providing capital for SMEs, the GIP is keen to ensure sustainable and inclusive growth for the SMEs through provision of business support services and capacity building assistance in financial management, corporate governance and environment practices.
Commenting on the new financing model, Harriet Thompson, the British High Commissioner to Ghana, noted that the GIP was a testament to UK’s commitment towards Ghana’s long term economic success.
Also, she affirmed her confidence that the model is bound to succeed and benefit Ghanaian businesses.
“This new platform, a global first for BII, will directly meet the needs of Ghana’s economy, increasing the opportunities to create jobs and support inclusive growth across the country,” MS Harriet stated.
Similarly, Secretary James Cleverly note that, “By investing in companies in Ghana today, we are investing in jobs and growth for the future.”
Much needed relief for SMEs
SMEs in Ghana account for a 60% contribution towards national GDP with 80% of businesses in the West African country falling under this category.
However, high interest and collateral requirements associated with short-term loans, coupled with macroeconomic environment dynamics pose a major challenge for their growth hence necessitating new friendly models.
Framers of GIP now hope to impact the growth of SMEs and create employment opportunities for many players through its facilities.