The COVID-19 pandemic’s impact on global economies, and on SMEs in particular, has been largely covered and commented on. Businesses are experiencing dampened or scaled-back operations, disrupted supply chains, volatile raw material and input prices, shrinking or disappearance of supplier’s credit, and increased cost of doing business. These impacts have resulted in a general ‘wait and see’ approach by the providers of debt financing and growth capital.
In Ghana, the public and private sectors have implemented several interventions to mitigate the pandemic’s negative effects. Yet still, best estimates for GDP growth for 2022 are capped at 5.8% and contingent on an increase in demand for Ghana’s exports, improved business confidence and a robust financial sector.
It is obvious that the pathway to getting the economy back on track cannot be solely reliant on the usual driver – Government spending, but through structured and unwavering support for strong and well-positioned local businesses which will in turn drive recovery and growth of the economy. There has to be an intentional targetting of the businesses and sectors to support, particularly when the lens of this new COVID-19 reality are applied.
Not all sectors or SMEs can continue business as usual without, in some cases, a significant review of business model, financing structure, and policy modification for the short-, medium and long-term. With the pandemic’s global nature, sources of venture capital (VC) and private equity (PE) capital have not been immune to the nationalism and geopolitics which have characterised the approach by various countries in their fight against spread of the pandemic – resulting in the prioritisation of national interests in many instances.
In a strategic pivot of 2019 that feels prescient now, especially within the current context, Injaro Investment Advisors – a Ghanaian fund manager with circa US$55m AUM and with over a decade’s experience managing PE funds with a focus on sub-Saharan Africa – decided that a new approach toward identifying and raising capital to meet the needs of Ghanaian SMEs was needed.
This approach would primarily raise capital from local pension funds while remaining open to raising funds from international institutional investors. These investors together with Injaro would aim to grow the real Ghanaian economy by supporting high-potential and well-managed SMEs in the Basic Needs (Education, Healthcare, Inclusive Financial Services and Agriculture) and Industrial (Industrial Services, Light Manufacturing and Food Processing) sectors.
The Fund, Injaro Ghana Venture Capital Fund, would deploy funds structured to meet specific needs of the beneficiary businesses in a manner that optimises a return for investors while ensuring that these profitable and well-run beneficiary businesses expand operations and achieve growth targets over the next five to seven years with active support from Injaro.
Having gone through almost two years with this pandemic, it is increasingly evident that the businesses which are resilient and are showing strong growth prospects have not only adapted to adjustments in market demand or the general business environment, but have also identified new ways of being operationally efficient while modifying their overarching business strategies to remain relevant.
These potential beneficiaries of the Injaro Ghana Venture Capital Fund also understand that the new paradigm of increased costs (freight and logistics, taxes, funding staff health and safety systems to mitigate spread of COVID-19 etc.) will not necessarily revert to the status quo ante as Ghana’s and the global vaccination rates improve. Any improvements will be incremental, and the need for a long-term big-picture partner such as the Injaro Ghana Venture Capital Fund is critical for businesses that must remain competitive locally and also within the African Continental Free Trade Area (AfCFTA) context.
About the Fund
The Injaro Ghana Venture Capital Fund is a 10-year fund with a target fund size of GH¢150m. The fund will be launched in Q1 2022, with the key pension funds in Ghana as investors. The fund will deploy GH¢15m per investment into sectors such as food and agribusiness, education, healthcare, inclusive financial services, light manufacturing, and industrial services. Beneficiary companies will need to have a proven business model and track-record (at least three years trading history), have an established team or be willing to set one up, be ESG-compliant and willing to work with Injaro to develop an exit plan.
About the Fund Manager
Injaro Investment Advisors Limited is an investment advisory firm licenced by the Ghana Securities & Exchange Commission, and is part of an international fund management group that manages investments across sub-Saharan Africa. Injaro has expertise in the areas of private capital, corporate finance advisory, asset management, management consulting and project management.
Yaw is currently an Executive Director at Injaro, where he is the lead for the Injaro Ghana Venture Capital Fund and for value creation. He has recently managed the Technical Assistance grants facility and ESG for one of Injaro’s funds. He has significant experience running high-capacity manufacturing operations serving clients in North America, Europe and Asia. He is passionate about hands-on strategic support for start-ups and early-stage businesses.