Financial Institutions and Private Equity Investors Seeking Desired Outcomes from Minister of Finance's Mid-Year Budget Revision
The mid-year budget review presented by Ghana's Minister of Finance, Dr. Ato Forson, on July 24, 2025, is set to address the expectations of private equity and institutional investors. The review focuses on fostering fiscal prudence, debt reduction, economic stability, and enabling infrastructure development, key policy outcomes that investors have been eagerly anticipating.
One of the significant changes proposed in the review is the directing of a small percentage of pension funds into private enterprises. This move is expected to facilitate the growth of key sector businesses, increasing their profitability and corporate income tax contributions. The National Pensions Regulatory Authority has reaffirmed guidelines and reporting requirements for pension funds to allocate at least 5% of their assets to alternative investments like private equity and venture capital by 2026. This shift could unlock over GH¢5 billion, shifting pension funds from primarily passive, short-term government debt instruments to long-term, growth-oriented private sector investments.
Investors have also expressed a desire for a stable macroeconomic environment. For macroeconomic stability, they want to see a clear and sustained commitment to fiscal discipline, prudent monetary policy, control of inflation, stabilization of the cedi long-term, and reduction of government borrowing from domestic markets. The mid-year budget review aims to deliver on these expectations by presenting a significant reduction in public debt and a sustained macroeconomic stability with maintained GDP growth projections and moderate end-of-year inflation forecast.
The review also emphasizes improved revenue collection and expenditure management to safeguard fiscal balances. With a reported primary budget surplus of 1.1% of GDP by June 2025, above target, it suggests a strong fiscal anchor and reducing concerns over fiscal slippage.
In terms of infrastructure, the review focuses on completing critical infrastructure projects, particularly road networks and energy sector support. These improvements are crucial for enhancing the operational environment for private businesses and investors.
The upcoming budget review is a pivotal moment for Dr. Ato Forson to articulate a clear vision that resonates with Ghana's investment community, transforming their expectations into tangible commitments for national development. The Ghana Venture Capital and Private Equity Association (GVCA) is discussing the mid-year budget review, expressing interest in specific policy announcements to create a more conducive environment for domestic capital to attract foreign investment.
Promoting industrialization and the 24-hour economy creates demand for labor across multiple shifts, generating a significant number of decent jobs in manufacturing, logistics, services, and other key sectors. The focus areas also include the Limited Partnerships (LP) Act, with clear legislative timelines and operational details for its implementation, which provides a familiar and robust legal framework for private equity and venture capital fund structures. Having an LP option under the Office of the Registrar of Companies will make Ghana a more competitive jurisdiction for private equity funds.
Investors have also emphasized the need for accelerated implementation and robust enforcement of reforms to channel domestic capital, especially pension funds, into productive private sector investments. For regulatory and policy reforms, they want to see a reduction in reliance on inflation-induced revenue and a more sustainable tax collection.
In summary, the mid-year budget review aims to foster confidence through fiscal prudence, debt reduction, economic stability, and enabling infrastructure development—key policy outcomes expected by Ghana’s private equity and institutional investors. The review is a significant step towards transforming Ghana's economy and attracting more investment, contributing to job creation and national development.
- Politicians and policymakers should consider the importance of stabilizing the nation's macroeconomic environment, as requested by investors, by committing to fiscal discipline, prudent monetary policy, inflation control, long-term cedi stability, and reduced government borrowing from domestic markets.
- To unlock over GH¢5 billion in pension funds for long-term, growth-oriented private sector investments, officials should ensure pension funds allocate at least 5% of their assets to alternative investments like private equity and venture capital by 2026, as guided by the National Pensions Regulatory Authority.
- Achieving the goals of fostering fiscal prudence, debt reduction, economic stability, and enabling infrastructure development set out in the mid-year budget review will require effective revenue collection and expenditure management, as well as the accelerated implementation and robust enforcement of reforms to channel domestic capital, particularly pension funds, into productive private sector investments.
