On increasing finance for SMEs, women-led businesses and infrastructure development in Africa
How is BII’s Growth Investment Partners (GIP) Ghana initiative transforming the financing landscape for smaller organisations?
ASANTE-POKU: Small and medium-sized enterprises (SMEs) are the lifeblood of Ghana’s economy. They represent over 90% of businesses, nearly two-thirds of the country’s GDP, and employ four in every five adults of working age in Ghana. Yet many face significant challenges in accessing growth capital through traditional funding sources and are confronted with high interest rates, short-term loans, high collateral requirements and currency mismatches. These challenges are exacerbated during tough macroeconomic cycles.
GIP Ghana provides access to innovative and long-term capital solutions tailored to meet the specific needs of SMEs. It offers patient and flexible capital based on the long-term earning potential of SMEs rather than their short-term track record and limited collateral. It furnishes investment from $500,000 to $5m, primarily in local currency, with flexible repayments linked to earnings and cash flow.
The platform aims to become a long-term partner to SMEs by providing support services that address their financial and business needs. Through this, it seeks to increase the number of high-quality and investment-ready SMEs and improve the skills and capacity of local investment professionals, including intermediaries, through which most investment is made in Ghana.
The strategy also offers institutional investors a credible opportunity to diversify their portfolios to private markets in a risk-managed way.
In January, GIP Ghana made its first investment in Ghanaian business processing outsourcing company E-Services Africa Limited to amplify its impact on job creation and unlock economic opportunities for key demographics such as women and young people.
How do you assess the strategies needed to meet the funding needs of female-led businesses?
ASANTE-POKU: Closing the funding gap for female-led businesses requires a multifaceted approach. Despite representing a significant portion of SMEs, these businesses often struggle with limited access to financing, with 70% reporting restricted access or no access at all. This is exacerbated by legal and cultural barriers that prevent women from owning land or inheriting assets, alongside biases that limit their access to financial inclusion.
Only 7% of SMEs in Ghana have female majority ownership. There is an urgent need to increase this percentage, empower more women in leadership positions and enable greater economic participation. Recognising the unique challenges encountered by marginalised segments of society, GIP Ghana’s innovative financing model helps bridge the funding gap for female-led businesses through risk-sharing partnerships with banks and specialist lenders, which makes banks more willing to back women-led SMEs.
Furthermore, modern financing methods such as psychometric credit scoring are being introduced to assess SMEs based on factors including cash flows and business relationships rather than just traditional collateral, offering a more equitable and inclusive route to assessing creditworthiness.
Non-financial support is also vital, including business training, mentorship and networking opportunities, which empower female entrepreneurs to grow their businesses and navigate challenges.
Additionally, BII’s Gender Toolkit – launched in partnership with FSD Africa, FSD Network’s Gender Programme and UN Women – aims to enhance gender lens investing and climate action in African capital markets. The toolkit is designed to deepen the understanding of gender bonds and their role in mobilising capital for women’s empowerment initiatives, thereby playing a crucial role in building a pipeline of gender lens investing opportunities.
What risk-management strategies address the challenges of mobilising private infrastructure funding?
ASANTE-POKU: In Ghana, mobilising private infrastructure funding can be challenging due to political and economic instability. Currency fluctuations pose considerable barriers to investment, impacting project costs and viability. These factors restrict the economic attractiveness of projects, limit opportunities to exit investment and affect investor confidence. Clear and stable regulations help stimulate investment and provide consistency, clarity and investment protection.
Establishing financing platforms like Globeleq and Gridworks to support clean energy projects in emerging markets is a growing focus at BII. These platforms aim to reduce risks and transform complex projects into bankable investment opportunities in underserved geographies. Globeleq, 70% owned by BII, is Africa’s leading independent power producer, delivering more than 1700 MW of power with additional projects underway. Gridworks invests in electricity infrastructure across Africa. Together, these BII-backed entities contribute to a growing portfolio of investment-ready projects, attracting further private investment to regions that traditionally lack such opportunities.
Blended finance instruments also play a pivotal role in mitigating risks and accelerating investment. The £240m Climate Innovation Facility, part of BII’s Kinetic portfolio, is a prime example of a tool that allows us to foster innovative, green projects that fill energy access gaps and attract commercial investment by improving their risk-return profiles. These risk- management strategies are vital in creating a conducive environment for mobilising private infrastructure funding, ultimately contributing to Ghana’s economic growth and stability.
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