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30.10.2008 Business & Finance

Venture Capital Trust Fund to expand its tentacles

By The Statesman

The Chief Executive Officer of the Venture Capital Trust Fund, Nana Osei-Bonsu, has disclosed that the Board of Trustees for the fund has approved a massive sustained public awareness and promotional programmes across the nation to erase misunderstanding of Venture Capital Financing.

He said the Trust Fund will also embark on training and capacity building to grow the industry.

Other future programmes the Trust Fund wish to embark on are intensive investment initiatives to establish more finance companies o serve other parts of the country; engage in other special purpose vehicle projects; explore warehousing receipt system to serve as market for specific farm produce and also provide storage facilities for food security.

Throwing more light on the operations of the Venture Capital Trust Fund at the weekly meet the press series organized by the Ministry of Information in Accra, Nana Osei-Bonsu, noted that the VCTF came about as a response to the hue and cry by the business community of inadequate and high cost of capital to run their businesses.

He said government's vision was to establish a VCTF that would provide low cost financing to businesses to grow, create jobs and improve wealth creation towards poverty alleviation.

 He noted that it is expected that with enough jobs and wealth created, these will consequently impact on Government revenues through taxes, describing it as a "win-win situation.'

He said VCTF was established by Act 680, which was passed by Parliament in 2004 to provide finance to Small and Medium Enterprises and develop and promote the Venture Capital Industry in Ghana.

However, operations of the Trust Fund did not start until a Board of Trustees was constituted in November 2005 and a Chief Executive Officer appointed subsequently. The Trust Fund started full operations in January 2006.

Nana Osei-Bonsu pointed out that within its relatively short history of two and half years the Trust Fund has chalked various degree of successes as it prosecutes its agenda to develop and promote the Venture Capital Industry in Ghana as well as provide funding to SMEs.

He indicated that the Trust Fund is not meant for micro or for big companies. According to him, the SMEs constitute about 90% of all economic activities in the country, which is a large business population to cover.

He described SMEs as any economic activity with value not exceeding US$1million, excluding land and building. He said while the Trust Fund is opened to every business, priority sectors are established based upon government"s economic growth programme-GPRS.

Currently the priority sectors identified are agriculture, pharmaceutical, ICT, tourism and energy. These priority sectors may benefit from about 55% of the total funds available.

The remainder of the funds is available to other valuable business opportunities. 'Viability of the project is the most important criteria to qualify for funding, and not because the project is in the priority sector,' he stressed.

Nana Osei-Bonsu explained that funding is not provided for businesses that engage in direct imports to sell, however, merchandising or wholesaling of locally manufactured goods is permissible.

Touching on the application process, he said an SME or individual has to provide the following documentation, a comprehensive business plan with three year projections, audited financial reports for the past three years for existing business, tax clearance certificate, incorporation papers (if applicable) and any other information that may be requested.

He said so far 21 SMEs across sectors of the economy and regions have benefited from the Trust Fund.

 He said the total capital invested in SMEs nationwide is GH¢9,770,443.94; giving the regional distribution as: Greater Accra, GH¢4,797,774.04, Ashanti, GH¢561,263.00, Brong Ahafo, GH¢500,708.68, Eastern, GH¢3,485,698.22 and Western, GH¢425,000.00.