Identifying Commercial Capital and Risk Mitigation Sources for Ghana

The Government of Ghana (GOG) has engaged in extensive analysis and consultations with the U.S. Government (USG) in developing a Joint Country Action Plan (JCAP) to assist Ghana in sustaining and broadening its economic growth. The two main goals of the PFG JCAP are to strengthen the power sector and increase access to finance, particularly for the Small, Medium including Large Enterprises (SMiLE) sector. The PFG Technical Working Group on Increasing Access to Finance has five overall goals: reduce government engagement in the banking sector, strengthen Financial Sector regulation and supervision, develop the Financial Sector infrastructure, broaden and deepen the financial sector, and encourage development finance and support SME access to finance. The current Scope of Work behind this report is entitled "Identifying and Analyzing Impact, Commercial Capital, and Risk Mitigation Sources: Critical for Financing Agriculture and Key Selected Sectors in Ghana." The report aims to identify the characteristics of, and potential options for, successfully realizing Ghana's funding objectives for both industry/business, social and national hard asset infrastructure. This includes target areas such as agribusiness, value-added companies, and national social and hard asset infrastructure needs. The report also explores the sources of funding and investment risk mitigation that can be applied to the broader business/industrial sectors. The Government of Ghana has engaged in initiatives to attract foreign investment, including the Ministry of Finance (MoF) and the Ghana Investment Promotion Center (GIPC). The report aims to complement these initiatives by identifying the characteristics of, and potential options for, successfully realizing Ghana's funding objectives. The report also explores the sources of funding and investment risk mitigation that can be applied to the broader business/industrial sectors. The report highlights the importance of developing the domestic "buy side" in Ghana's capital markets. This includes encouraging greater participation of local and regional institutional investors, such as pension funds and insurance firms, in domestic capital markets. The report also emphasizes the need to develop the domestic "supply side" of capital markets, including the issuance of equity and debt instruments on the Ghana Stock Exchange (GSE), the Ghana Alternative Market (GAX), and the Ghana Fixed Income Market (GFIM). The report identifies several key areas for focus, including the development of infrastructure, the promotion of private sector development, and the strengthening of the financial sector. The report also highlights the need for regulatory adjustments to facilitate the mobilization of internal institutional capital and the development of investable ideas. The report concludes by emphasizing the importance of continued engagement between USAID FinGAP and the major local owners of capital, as well as the regulatory and oversight bodies, to build and broaden the opportunities for mobilizing internal institutional capital and developing investable ideas.