Ghana’s pension funds, which collectively manage assets worth GH¢86.23bn (approximately $8.1bn), are undertaking a major strategic shift away from government securities. This move is coupled with a new government mandate directing them to allocate at least 5% of their assets to venture capital (VC) and private equity (PE) by 2026, potentially unlocking a multi-million dollar windfall for the country’s burgeoning startup ecosystem.
The shift comes as total pension assets grew by a dramatic 39.5% in the last year, driven by stricter contribution enforcement and favourable investment returns, according to Ghana’s 2024 Financial Sector Report. Now, this growing capital pool is being steered towards new horizons.
The great reallocation
For years, Ghanaian government bonds were the default investment for the country’s pension funds. However, after a domestic debt restructuring programme and a search for higher yields, fund managers are diversifying.
Data from the report shows a significant pivot:
- Investment in government securities dropped from 81.5% of total pension assets in 2023 to 72% in 2024.
- Conversely, allocations to Collective Investment Schemes (like mutual funds) more than doubled from 1.46% to 3.51%.
- Exposure to publicly traded shares also more than doubled, rising from 2.50% to 5.71%.
While this shows a growing appetite for market-based assets, the real game-changer for the tech ecosystem is the government’s formal push into alternative investments.
A government-led push into VC
Despite regulators permitting pension funds to allocate up to 25% of their assets in alternatives, the current figure stands at a mere 0.58%. The government is now forcing the issue.
The new policy, recently announced at the launch of the Ghana Venture Capital and Private Equity Compact, mandates a 5% allocation to VC and PE by 2026. If fully implemented, this would inject over GH¢4.3bn (approx. $290m) of fresh, long-term capital into privately-held companies — a figure more than double the entire $127m raised by all Ghanaian startups in 2024.
Early movers show the way
Some state-backed funds are already testing the waters. The Minerals Income Investment Fund (MIIF), which manages Ghana’s mineral royalties, has begun deploying capital into startups that support the mining value chain.
Through the Injaro Ghana Venture Capital Fund, MIIF has made several strategic investments, including:
- Zeepay: A fintech enabling cross-border remittances, which received $2m in 2023.
- Kofa Technologies: A green energy startup developing lithium-ion batteries, a strategic bet following Ghana’s recent discovery of lithium deposits.
- DDP Outdoor Limited: An advertising agency that services major mining corporations.
These deals are early signals that Ghanaian institutional investors can play a role in fuelling high-growth sectors beyond simply writing cheques.
A tipping point or a false dawn?
The government’s directive comes at a pivotal moment. In 2024, Ghanaian startups saw a 95% increase in the number of funding deals, raising a total of $127m. The ecosystem is clearly maturing, with a growing pipeline of startups in fintech, agribusiness, and greentech ready to absorb new capital. The introduction of hundreds of millions of dollars in local, long-term funding could be transformative, reducing reliance on foreign VCs and fuelling the next wave of Ghanaian scaleups.
However, significant hurdles remain. Pension fund trustees are inherently conservative, and many lack the in-house expertise to evaluate high-risk venture deals. For this policy to succeed, it will require more than just a mandate. It will demand a parallel effort to build capacity among fund managers, create robust due diligence frameworks, and foster greater collaboration between the pension industry and the VC community.
If Ghana can navigate these challenges, this policy could cement its position as a leading startup hub in West Africa. The message from Accra is clear: alternative financing is no longer just an option; it’s a strategic imperative.