Take stakes in social enterprises—Pension fund managers urged

Take stakes in social enterprises—Pension fund managers urged

Social Enterprise (SE) Ghana has begun discussions with pension fund managers to help create an enabling environment that will allow fund managers of tier two and three contributions to take stakes in its yet-to-be established private-sector-led impact fund.

The move is to fast-track the establishment of the proposed fund to provide long-term funding to social enterprises and other firms that report on social impact.

Speaking to the Daily Graphic at a breakfast meeting by the Social Enterprise Ghana in Accra, the Chief Executive Officer (CEO) of SE Ghana, Ms Amma Lartey, observed that her office was not only engaging with fund managers but also financial institutions to raise capital for the proposed fund.

“Next year, we are planning to establish a private-sector-led fund of funds that can support the creation of venture funds to provide long-term funding to social enterprises and other firms that report on social impact.

“In doing that, we need to create a stable and well governed investment vehicle that will thrive on strong commitment to ethics but resilient enough to attract fund managers to take stakes in social enterprises,” she said.

The meeting

The meeting was organised by SE Ghana with the support of the BUSAC Fund, DANIDA and USAID as part of the advocacy for the adoption and implementation of the social impact investing policy.

It was attended by key players in the asset management landscape in Ghana as well as representatives of developmental partners and some entrepreneurs.

Ms Lartey noted that the meeting was an important part of efforts to drive the strategic agenda in order to bring together the government and the private sector to determine what could be done collaboratively and independently to implement the Ghana Social Enterprise Policy and drive impact investing.

She defined social enterprises as businesses that are aimed at driving social or environmental impact in addition to making a profit, have the potential to attract investors and cause a significant change in Ghana if they were recognised and regularised accordingly.

“SE Ghana with support of partners pushing two main agenda. The first is to convince the government to have a social enterprise policy given that it is a nascent industry in a country heavily dominated by the government sector. The second is to strategically increase funding for social enterprises across the country.”

Social change

The General Manager of the Venture Capital Trust Fund (VCTF), Ms Hamdiya Ismaila, said the erroneous perception that the scope of social enterprises was limited to non-governmental organisations engaged in some social work and hence not profitable was wrong.

With examples from other developed countries, she explained that social enterprises could be a positive driving force for innovation and social change.

She underscored the need to make funding accessible to social entrepreneurs to enable them to create businesses that were impactful to society.

She bemoaned the business registration system in Ghana as it does not recognise nor make any provision for social enterprises.

While acknowledging the arguments that lead asset managers to invest in government bonds instead of the productive sector, she cautioned that “we run the risk of high unemployment rates that may spiral into heightened social unrest and other accompanying challenges.”

She indicated that the Venture Capital Trust Fund has been interested in impact investment in Ghana and has made efforts, in recent years, to drive impact investing through policy and information resources.