African Pension Funds shift more capital into private equity
Ghana is increasingly being recognised as one of Africa’s most credible examples of how domestic pension savings can be invested in more diverse alternatives and channelled into assets such as private equity, venture capital and SME growth financing.
Ghana is emerging as a prominent leader among African nations in directing pension funds towards private equity and alternative investments. This shift is part of a broader trend in Africa, where institutional investors are moving away from traditional government bonds and real estate to support business growth, job creation, and economic development.
Ghana's regulatory framework permits up to 25% of pension assets to be invested in alternative instruments, providing a fertile ground for private capital participation. Notable initiatives include Ghana's 5% Pension and Insurance Industry Compact, Impact Investing Ghana's Pension Industry Collaborative, and the $70 million SME Fund of Funds managed by Savannah Impact Advisory.
The Ghanaian pension sector has seen significant progress, with pension trustees and schemes investing in private equity and venture funds, such as the Injaro Ghana Venture Capital Fund and the Mirepa Capital SME Fund I. This shift is particularly noteworthy as it helps reduce dependence on foreign currency funding, which often exposes businesses to exchange-rate risks.
Ghana's experience demonstrates the potential for domestic institutional capital to play a crucial role in financing local enterprises, SME growth finance, and broader economic transformation.
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