By Isaac SIMPSON
Ghana’s pension funds sit on a potential goldmine of long-term patient capital, one that if properly deployed, could transform our nation’s economic destiny.
Yet today, these funds are largely parked in short-term government securities, creating a paradox where Ghana has billions in patient capital but continues to suffer from an acute shortage of long-term financing for infrastructure, industrial expansion, and private sector growth.
This article explores how developed countries have harnessed pension capital for national transformation, examines whether tools like Special Purpose Acquisition Companies (SPACs) and infrastructure bonds and guarantees could unlock Ghana’s economic growth, and calls for urgent reform in the deployment of pension assets to move from passive capital preservation to active nation building.
Ghana’s Pension Dilemma: Capital without Impact
As of December 2024, Ghana’s total pension assets exceed GHS 80 billion, with at least GHS 57 billion sitting with private pensions. However, over 80% of these assets are allocated to short-term treasury bills and government bonds with maturities under three years.
These instruments provide predictable but limited returns and are largely reactive rather than transformative. Worse still, they contribute to a distorted yield curve, incentivizing short-term government borrowing while crowding out long-term investments that could reshape Ghana’s economic landscape.
This conservatism, while understandable, as pension fund trustees have fiduciary duties to preserve capital and ensure liquidity, fails the broader mandate of pensions in nation building. Pension capital, by its nature, is long-term and patient.
When invested appropriately, it can be the cornerstone for developing critical infrastructure – roads, water systems, energy – and nurturing the growth of local industry while generating commensurate returns for the level of risk compared to the current allocations. Instead, Ghana’s pension system is entangled in a loop of short-term lending to government, which neither stimulates private sector growth nor delivers meaningful real returns to contributors.
This narrow investment pattern has several drawbacks including hurting long-term return for members, not contributing to building resilient infrastructure, starving local industries of long-term capital and limiting the pension’s industry’s impact on job creation, innovation and inclusive growth.
Global Lessons: Pension Capital as a Nation Building Tool
Globally, countries like Canada, Australia, and South Africa have demonstrated the power of pension capital in economic transformation. The Canada Pension Plan Investment Board (CPPIB), for instance, actively invests in infrastructure, private equity and real-estate, both domestically and abroad.
It has ownership stakes in toll roads, airports, and utilities – assets that not only provide strong, inflation-protected returns, but also contribute directly to the national economy.
Similarly, Australia’s superannuation funds have become leading financiers of transport, energy, and social infrastructure. By leveraging their capital for long-term, productive investments, these funds have achieved a dual mandate: ensuring retirement security for contributors and supporting national development.
In South Africa, the Public Investment Corporation (PIC), which manages pension assets on behalf of public servants, has been pivotal in providing long-term capital to develop housing, renewables, and transport. These models prove that prudent but ambitious investing of pension capital is possible – without compromising safety or returns.
SPACs: A Vehicle for Private Sector Transformation
Current pension fund regulations in Ghana restrict direct investment into privately held companies, limiting the ability of funds to directly channel capital toward high-potential local businesses.
The shares of many of Ghana’s most successful enterprises remain unlisted. Enabling pension funds to invest in such companies would not only support their growth but also offer Ghanaians a meaningful stake in the nation’s economic progress through their retirement savings.
While concerns around corporate governance persist, there are practical mechanisms such as enhanced oversight, board representation, and structured investment frameworks that can help safeguard pension assets and unlock long-term value from promising local corporates.
SPACs, which are investment vehicles created to acquire private companies and take them public could serve as a gateway for Ghanaian pension funds to inject capital into viable, privately held, local corporates. At present, most Ghanaian private companies face significant challenges in accessing the long-term, patient capital required to scale sustainably.
High interest rates, a limited pool of local private debt instruments, and a scarcity of equity investors have created a financing gap that stifles growth. To address this, there is an urgent need for a structured investment vehicle that enables pension funds to participate, both directly and indirectly, in private equity and growth capital opportunities. Such a mechanism would not only unlock capital for promising local businesses but also drive long-term economic transformation and wealth creation for Ghanaian savers.
A SPAC structure, sponsored by credible fund managers and seeded by pension funds, could acquire and recapitalise high-potential, privately held Ghanaian companies in agriculture, manufacturing, logistics, or tech. This would not only formalise and grow local enterprises but also create a pipeline of investible businesses for pensions and institutional investors alike.
SPACs could also help deepen Ghana’s underdeveloped equity markets by listing successful targets, giving pension funds access to long-term growth assets while supporting economic transformation. However, this will require a supportive regulatory framework and active collaboration between the Securities and Exchange Commission (“SEC”), the National Pensions Regulatory Authority (NPRA), the Ghana Stock Exchange (“GSE”) and institutional investors.
De-risking Infrastructure Investment through Infrastructure Bonds and Guarantees
Another powerful enabler lies in the infrastructure bond space. Ghana desperately needs to finance roads, water systems, ports, and urban transport. Yet, pension funds remain reluctant to invest in long-dated infrastructure bonds because of perceived risk, currency mismatches, and the current abnormal yield curve that makes longer-dated instruments unattractive.
This is where government-sponsored guarantee companies like Nigeria’s InfraCredit come in. InfraCredit provides guarantees on infrastructure bonds, enhancing their credit profile and making them bankable for pension funds. Since its establishment, InfraCredit has catalysed over $300 million in private investment into infrastructure in Nigeria de-risking local projects and crowding in institutional capital.
A Ghanaian version of InfraCredit, possibly anchored by the Ghana Infrastructure Investment Fund, the Ministry of Finance, and Development partners, could guarantee infrastructure bonds for strategic sectors: water, housing, transport, renewable energy. Combined with interest rate curve reforms, this would allow pension funds to invest safely and meaningfully in Ghana’s long-term future.
A Coordinated Strategy is Essential
To truly harness the power of pension capital for nation-building, Ghana needs a coordinated national strategy involving the Ministry of Finance, NPRA, SEC, and key industry players. This strategy should focus on incentivizing long-term investments by pension funds through tax and regulatory reforms and creating transparent pipelines of investible projects with standardized risk-return profiles.
The strategic also focuses on encouraging in house (standalone) pension scheme to employ the services of a chief investment officer to bring process and discipline to asset allocation and building capacity within pension fund management teams to evaluate and manage complex, long-term investments. Additionally, it creates clear and consistent ways to measure impact so pension funds can see the social and economic value of their long-term investments
The Cost of Inaction
If the status quo persists, Ghana risks missing a historic opportunity. Pension funds will continue to deliver suboptimal returns to contributors while the country’s infrastructure deficit widens, and its private sector remains starved of growth capital.
Worse still, the heavy reliance on short-term public borrowing will continue to create cyclical fiscal pressures without solving the underlying developmental challenges. In contrast, a bold shift in pension fund policy could fundamentally change Ghana’s economic trajectory. Long-term capital deployed wisely can stimulate domestic production, reduce unemployment, stabilize the cedi, and reduce reliance on external debt.
Conclusion
Ghana’s pension system is at a crossroads. It can either remain a passive financier of government deficits or become a cornerstone of Ghana’s development renaissance. Global models show that with the right reforms, pension funds can drive infrastructure development, industrial expansion, and economic resilience. Ghana cannot afford to squander its pension capital on short-term arbitrage. We must reimagine our pension asset allocation model. This means:
- Establish a government-backed infrastructure credit enhancement facility to de-risk private capital participation in long-term national projects.
- Introduce innovative investment vehicles, including SPAC-like structures, to mobilize domestic capital into vetted, growth-ready Ghanaian enterprises.
- Implement bond market reforms and deepen the yield curve to facilitate efficient long-term capital mobilisation.
- Foster a stable macroeconomic environment – with low inflation, stable interest rates, and a resilient currency – through coordinated efforts by the Ministry of Finance and the Bank of Ghana, to make long-term investments more viable and attractive.
The future of Ghana’s economy rests, not just on government budgets or donor aid, but on smart deployment of domestic capital. If we get this right, pensions won’t just protect retirements – they will build roads, power cities, grow businesses, and change the trajectory of our nation.
Isaac is the Manager, Financial Advisory & ECM, Investment Banking, Stanbic Bank Ghana
