Sean Duggan, Lead Investment Promotion Expert under the EU-Funded Project, has indicated that a large proportion of businesses are not investment-ready, and as a result are finding it difficult to raise funding.
The situation, he indicated, is because “Investors are reluctant to invest in businesses that are not investment-ready and are unable to scale quickly,” he said.
It is to close this gap and provide support for these businesses that the EU-funded Project, in partnership with the Association of Ghana Industries (AGI), is supporting SMEs to better understand what it means to be investment-ready. The Project is also promoting investment in the Ghana agro-business sector to the foreign investment community.
According to Sean Duggan, Ghana offers a range of opportunities for investment in the agro-business sector for investors. He explained that the EU-funded Project has been working with registered SME agro businesses to support them become investment-ready. This they do through training businesses to help them get a better understanding of what it means to be investment-ready.
In an exclusive interview, Sean Duggan said the EU-funded Project has also been providing one-on-one mentoring support to four SMEs. The four companies – Truecoco Ghana, Prestige Neema Enterprise, Hendy Farms and WAMI Agro – have been given mentoring support and recommendations to improve their investment-readiness and promote them to potential investors.
He explained that the four businesses have gone through a business diagnostic and financial assessment. Each of the businesses have also received help to prepare an investment teaser that will be used with potential investors.
Commenting on the support that Hendy Farms has received from the EU-funded Project, Sandra Snowden noted that: “The EU Project has been very beneficial. It has given us one-one-one, sit down support with experts so as to be able to understand what our business needs to do to get (investment) ready”.
She explained that the business diagnostic and financial assessment has allowed Hendy Farms to “Identify little gaps in our industry to be able to strengthen and to be ready for investment”.
Sean Duggan also noted that it is difficult for SMEs to get information on equity investors who are ready to invest in agro-processing sector in Ghana.
For instance, he said the Project has been able to identify at least 85 active investors that are interested in investing in Ghana’s agro-businesses. He notes that: “The issue is that most Ghanaian businesses operating in the agro-processing sector either do not know about potential investors or are unable to tap into their investment funds, because they do not understand or are unable to meet the requirements investors use to make their investment decisions”.
Many businesses, particularly SMEs, fail in their quest to access funding because they are not investment-ready, says Sean Duggan.
Despite the availability of investment funding, he said, many SMEs lack what investors expect; such as having up-to-date audited accounts. In many cases, businesses the Project has spoken with do not keep complete records of sales, expenses, income and profit. “We have found that a large proportion of businesses are not investment-ready. As a result, they are finding it extraordinarily difficult to raise funding,” he said.
He also noted that there is a level of frustration among businesses that they are unable to access investment funds despite the availability of funding. Part of this frustration is a result of gaps in guidance and information about how they can be investment-ready, and the processes and factors investors use to make investment decisions.
“In many cases, businesses assume that being investment-ready is having a business plan, or in some cases having a good business idea. What investors look for in their investment decision is a business operated by competent and experienced management with a good track record of growth, and that is quickly scalable.”