by Elorm Desewu
The World Bank has supported the operations of the Venture Capital Trust Fund (VCTF) in Ghana with an amount of US$40 million after the government has failed to allocate funds to the trust for some couple of years now.
So far, the World Bank has disbursed US$16million out of the US$40 million for further on lending to Small and Medium Enterprises (SMEs) operating in the area of agriculture, health and education through its fund managers.
The VCTF is expected to draw down another US$11million from the US$40 million by the close of this year, Economy Times has learnt.
The government has continuously crippled the VCTF financially, although the VCTF Act, Act 2004 (Act 680) section 3 says an amount of money equivalent to twenty-five percent of the proceeds of the National Reconstruction Levy should be paid to VCTF.
VCTF is a Government-backed venture capital fund of funds, which focuses on investing in venture capital funds dedicated to investing in Small and Medium Scale Enterprises (SMEs).
The Trust Fund also deploys monies to support other activities and programs, which are aimed at promoting venture capital financing in Ghana. It aims to create a vibrant and well-structured venture capital industry with investments in various sectors, leading to job and wealth creation.
VCTF has invested in Venture Capital Finance Companies which are designed to increase the availability of risk capital to SMEs and are being managed by locally-based fund managers.
VCTF operates through Venture Capital Finance Companies (VCFC). Each VCFC is managed by a Fund Manager, licensed by the Securities and Exchange Commission (SEC). VCFCs (fund vehicle) act as intermediaries between SMEs requiring funds for viable business projects and the Trust Fund.
VCFCs are encouraged to invest in all sectors of the economy but are precluded from investing in businesses that engage in direct imports to sell.
