What are the main constraints limiting early-stage green businesses in Ghana from accessing investment opportunities? That was one of the main questions underpinning the discussions at SNV Ghana's maiden GrEEn Investment Forum held on 26-28 of January 2021. The 3-day virtual forum brought together stakeholders from the banking industry, venture capital and impact investment professionals, development agencies, diaspora investors and Small and Medium-sized Enterprises (SMEs) and other stakeholders in the green and circular economy.
GrEEn, short for Boosting Green Employment and Enterprise Opportunities in Ghana, is a European Union-funded project co-implemented by SNV in Ghana and the UN Capital Development Fund (UNCDF) which aims to improve employment and job creation in the green and circular economy in Ghana's Ashanti and Western regions. One of the GrEEn project's key objectives is to support access to finance for green SMEs as part of its incubation and acceleration programmes. The GrEEn Investment Forum sought to trigger conversations with stakeholders to identify and address the issues that confront SMEs on the one hand and financial service providers on the other hand.
- To qualify for banking products, SMEs must have positive cashflows, be structured appropriately, have a good credit history. They also need well-defined business models, a strong team, and a thick skin to become successful players in the green economy. The relatively low number of SMEs that meet these criteria present an opportunity for banks to support business development programmes, offer blended finance products with less stringent requirements and increase awareness of available financial products.
- Most investment products are not structured to favour SMEs that need small ticket sizes. The types of funds available are more suited to larger companies. To fix the mismatch of funds and available SMEs, stakeholders in the ecosystem must collaborate to strengthen SMEs' quality through business development services and the provision of flexible and more suitably structured capital for very early-stage SMEs.
- Diaspora investors, often unaware of the available investment opportunities in their home countries, need trusted eyes and ears on the ground to provide better security and support to make accurate investment decisions. Business development service providers, such as incubation and acceleration hubs, should partner with diaspora investors to provide technical support and oversight of SME spending post-investment. The Ghana Investment Promotion Centre (GIPC), the Diaspora Affairs, Office of the President of Ghana, and the various embassies and international agencies can improve awareness of business opportunities available for investment and support diaspora investors to make the right decisions.
- The green and circular economy in Ghana is budding, and therefore SMEs must ensure that their products or services have a big enough market to be sustainable. It is imperative to work towards investment readiness by balancing an eco-inclusive approach with business sustainability.
In conclusion, it is evident that to bridge the gap between the supply of financial services and demand from early-stage SMEs, an ecosystem approach is needed, which is the call of the GrEEn project. GrEEn invites stakeholders to work on partnerships across sectors and disciplines to improve funding and ultimately promote the growth of SMEs in Ghana's green and circular economy.
Written by: Genevieve Parker-Twum, Senior Incubation and Acceleration Advisor, GrEEn Project.
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