To ensure it runs smoothly, government could channel its investment in the One District, One Factory project through the Venture Capital Trust Fund (VCTF), and then offload its shares on the stock market after a period of time, Albert Essien, Council Chair of the GSE, has said.
“Government is talking about One District, One Factory, what stops it from channeling funds from the Venture Capital Trust Fund (VCTF) into these companies?
All that needs to be done is to put competent people on the boards of these companies so they run just like any typical venture capital or private equity fund and then exit via the stock exchange,” Mr. Essien said in an interview with accra based Business and Financial Times.
The VCTF, after almost five years of neglect, has received a budgetary allocation of GHC 220million this year, which it is supposed use to develop local businesses that create jobs.
With about 90 percent of registered companies said to be small and medium-scale, employing more than 80 percent of the workforce and contributing more than 50 percent to GDP, government believes that resourcing SMEs is the best way to sustain economic growth, thus the funding for the VCTF.
With the One District, One Factory initiative, a total of US$3billion has been raised in pledges by the project’s secretariat, with the Trade and Industry Ministry envisaging the cost of each project to range between US$1million and US$5million.
Also, about 150 proposals have been received from both foreign and local investors keen on partnering government in its plan to establish a factory in each of the 216 districts in the country.
Government plans to own not more than 30 percent in these companies to ensure that it remains a private sector-driven project.
Albert Essien argues that with a strong foreign and local investor confidence in the much-anticipated project, government could route its stake through the VCTF, and exit when necessary.
“When private equity funds put monies into companies, one of the ways exiting is through a stock market. We already have the VCTF, well resourced; so, why don’t we use it to help startups and local businesses?
There should be good governance for those businesses and with the right people sitting on the boards representing the fund, as is done with all funds, to make sure that you grow it, get to a point and exit and exiting via the exchange,” he said.
SOEs must get onto the bourse
Mr. Essien added that government should look to the stock market when it kick starts its moves to offload or divest its interest in State Owned Enterprises (SOEs).
“We would want to encourage government to divest the SOEs via the exchange. It will send a positive signal to others in the private sector and will also give pension funds and other funds the appetite to also come onto the exchange to diversify their portfolio. We want to see the exchange play a catalytic role in the development of the country.”
Source: B&FT Online