- records keeping, lack of knowledge, information barriers remain
Many businesses, particularly small and medium-size enterprises (SMEs), fail in their quest to access funding because they are not investor ready, says Sean Duggan who works with a European Union (EU) funded Investment Promotion and Business Linkages Activities in Ghana.
Despite the availability of reasonable investment funding sources to businesses, he said majority of them lack what is required, such as having an up-to-date audited account, and generally do not keep records of expenses and inflows, profit and income and client database, to access funding.
“There is a large proportion of businesses that are not investor ready. As a result, they are finding it extraordinarily difficult to raise funding because the sources of investments are saying, ‘yes, we understand the position you are in but you are not investor ready, so we will not invest in you’,” he said.
For instance, he said there are at least 85 active investors that are interested in agro-businesses in Ghana, but most Ghanaian businesses either do not know about them or are unable to tap into them because they cannot meet the requirements.
He spoke to the B&FT on the sidelines of an investment session dubbed: ‘Boardroom Breakfast Event’, the fifth in a series, organised by the Association of Ghana Industries (AGI) in collaboration with EU’s Investment Promotion and Business Linkages Project.
Although he admitted that there is quite a substantive number of sources of investor funding, he added that there remains a level of frustration among businesses that they are not given sufficient guidance and information about how they can be investor ready and how they [ investors] decide to choose one business over the other.
“Businesses often confuse these concepts with having a business plan or business idea. That confusion is understandable but investors are clearly saying it is more than that. They will ask questions like, ‘do you have a board, or available reports of accounts’, among others.”
Meanwhile, Director of Business Development at AGI, Johnson Opoku-Boateng, said the connection between the local investor community and industry is non-existent, hence, the need for more engagement.
“Anytime we talk about investment, we think about foreign direct investments (FDIs). We also know Ghana Investment Promotion Centre has been doing a very great job on how to attract FDIs.
“But we also thought there are so many local investors that can invest in our businesses, and so this is the beginning of a new era where businesses will be closer to investors,” he added.
By working with EU through its Investment Promotion and Business Linkages Project, he said AGI seeks to bridge that particular gap to enable businesses access funding from domestic investors.
“This meeting is to tell the businesses what exactly they need to do to make themselves visible for investment, and to inform them on how much money is in the ecosystem for investment,” he said.
For his part, Chief Executive Officer of Innohub, a consulting firm, Nelson Amo, said the forum was held to help SMEs to understand the option of equity financing and how they could explore it.
“From the nature of questions by the participants, we could see clearly that there is need for a lot more engagements and information-sharing on how to secure investment.
“It is not just about needing money, but how to make the investors understand that their money will return to them within the stipulated period,” he added.
