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Some African countries said to have $300b in pension funds

Some countries in Africa are reported to have as much as $300 billion worht of assets being managed in pension funds.

Ms Jihane Hakimi, a Blended Finance Specialist at the African Development Bank Group, has called on Ghana to take steps to unlock domestically available capital for investment in impact enterprises.

She said there was money in African countries, and Ghana is not an exception, noting that insurance funds, pension funds, philanthropic funds and high net worth individuals could be attracted to fund impact businesses.

Speaking to the Ghana News Agency at the Ghana Impact Dialogue in Accra, Ms Hakimi said a study by PricewaterhouseCoopers (PwC) had found that in 2017, 12 African countries had $300 billion of assets under management in pension funds.

Ghana also received about $2.2 billion in formal remittances from abroad in 2017, which could be diverted from consumption to investment.

“…So it’s huge and the question is where does this money go? And what can you do with it?” she asked.

Ms Hakimi said pension funds, while they had so much money, were very traditional, investing mainly in infrastructure and government bonds.

“They have a role to play…local pension funds have a role to play in investing in Africa’s development; in Ghana’s development, because these are Ghanaian pension funds. It could be like 0.5 per cent dedicated to impact investing,” she stated.

Ms Hakimi said it was critical to create channels or funds that would allow non-traditional capital providers, like high net worth individuals and philanthropic organisations, to invest in such enterprises.

Ms Hamdiya Ismaila, the General Manager of Ghana Venture Capital Trust Fund, said there was the need to sync policies in Ghana to allow portions of long-term capital like pension funds to impact businesses.

“In other countries, pension funds have been able to put money in this space so we need to see how we can create vehicles to pension funds to invest in funds who can then invest in social enterprises and other companies that really drive impact,” she said.

Ms Ismaila said insurance companies also had long term capital that could be used to fund such businesses, however, some policies prevented them from doing because of the risk-based insurance system, thus the need to look at how those policies sync together to drive impact in the economy.

She said Ghana must take the lead in driving her impact economy by looking at the revision of laws or policies that hindered investments of such funds into impact businesses.

“…..You don’t expect people to bring their money and you don’t want to put in yours. Pension funds are private capital, let’s unlock it,” she said.



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