Social Enterprise Ghana with support from the Business Sector Advocacy Challenge (BUSAC) Fund has held a one-day stakeholders sensitization workshop on the importance of financing social businesses by impact investments.
Speaking at an event in Accra, on Thursday, October 8, 2020, Chief Executive Officer (CEO) of Social Enterprise Ghana, Amma Lartey, said investment in local businesses is critical to eliminate the debt capital many social businesses resort to in financing their their businesses.
She said startups especially require “patient capital” that will be able to support them grow rather than one that put them under undue pressure to return profits in a very short time.
“We believe that with innovation, we can make capital available for businesses that need that capital to be able to grow. There is a need of funds focused on the impact that will then lend to other funds to be able to support social businesses. In Ghana, all enterprises need patient capital, the capital that we have currently is mostly debt capital, which then put the liability on the company. We need to have more equity capital and other capital that is patient to work with the entrepreneurs for ten years to allow the business to grow before it begins to receive returns,” she said.
General manager of Venture Capital Trust Fund, Hamdiya Ismaila further explained that social businesses exist to decrease the burden on the governments to address various social problems.
She indicated that due to the quest to achieve the various sustainable goals, impact investment was critical.
She therefore stressed on the need for asset holders to be educated and encouraged to invest in social enterprises willingly to help in the fulfillment of some Sustainable Development Goals.
“We need to begin to engage and encourage asset holders and owners on the deployment of capital and how to make sure we bring internationalism to it so that we are able to drive the impact we want to drive. Impact investment is gaining many grounds now because the SDGs show that there are shortfalls and we need to bring in the private sector especially commercial investors, asset holders to be able to achieve these goals.”
BUSAC Fund Grants Monitor, John Asante applauded the Social Enterprise Ghana team for striving to push the initiative amidst the COVID-19 pandemic.
“I must say we are proud of what Social Enterprise Ghana is doing. We have many grantees all over the country and we do our best in monitoring them. Most of them have encountered a lot of problems in the implementation of their programs but that of Social Enterprise Ghana has done their best even amidst the COVID-19.”
Meanwhile, a finance and investment expert, Professor Ernest Ofori Asamoah is making a case for increasing taxes to fund social enterprises in Ghana.
He said a special fund can be created or an increase in an existing tax in order to support this venture.
“Based on our expert knowledge and examining other countries, we identified four key sources [of funding] in Ghana. There are existing systems, and these systems are potential areas the fund can look at. One is funds that have been set up using a new sector tax, the other aspect is increasing existing tax , there is also commercial capital raise and the other is voluntary contribution so that those philanthropy ideas can be converted social enterprise to ensure sustainability,” he noted.
Social Enterprise Ghana is a network of high impact social enterprises and entrepreneurs operating in Ghana. It has a registered membership of 590 businesses nationwide operating in climate-smart agribusiness, agroforestry, waste management and recycling, health services, education, technology, etc. to solve challenges for the poor, vulnerable, marginalized in an inclusive and dignified way.