Small and Medium Enterprises (SMEs) have been urged to prioritize corporate governance to attract the needed funding to expand their businesses.
According to the Chief Investment Officer at Stanlib Ghana, Kwabena Boamah, a proper corporate governance structure will strengthen their operations and allow businesses to cross generations.
He made the call at a Private Equity Dialogue in Accra organized by Stanlib Ghana, the leading asset manager.
The aim of the dialogue was to underscore the importance of Private Equity to Ghana economic development since majority of investors know very little about it.
It emerged that, about 60 percent of fund managers in Ghana prefer to invest funds in the financial services, manufacturing, estate development and Information and Communications Technology because there sectors have exhibited highest growth potential in the economy.
Getting top private-equity returns in Ghana depends on sustained work in finding and winning the best deals, useful and strategic management inputs, and inspired exits from the investments.
Raising Private Equity Funds in Ghana is often difficult, since local Private Equity firms are close to non-existent.
The relatively low level of financial development means that Ghanaian-owned fund managers have limited options for raising funds.
But Mr. Boamah said Private Equity is becoming an increasingly important factor in Ghana’s economic development hence the need to educate players in the industry to invest in it.
“If we have pension schemes investing in Private Equity Firms, we will have the returns staying in the country to help improve the returns of the pensioner” he added.
He revealed that, a major challenge of Private Equity Firms is find viable SMEs that are willing to upscale themselves and give up control to allow strategic partnership to grow and develop their businesses.
“We have a situation where our corporate governance is not as strong as a country especially SMEs space so they are mainly owned by family people who are not willing to lose control and allow a third party come in transform the business” Mr. Boamah stressed.
Some fund managers who were at the dialogue called on regulators to create a conducive regulatory environment for the Private Equity industry.
They maintained that, the absence of an appropriate regulatory framework for private equity and alternative investments in general does not facilitate the growth of the industry.