Investment Climate Reform Facility

NAME OF REQUESTER ORGANISATION: Social Enterprise Ghana

PROJECT NAME: Improving the Business Environment Reform for Social Enterprises in Ghana

CONTEXT: Social enterprises are playing a crucial role in the economic growth of Ghana, but more support is needed to enable their growth . Social Enterprise Ghana is the membership body for social enterprises in Ghana.

In 2017, a draft Social Enterprise Policy was developed by Social Enterprise Ghana and its partners. To move the draft policy forward, Social Enterprise Ghana in 2021, was seeking to take it through a Public-Private Dialogue process, to update the draft and develop an action plan to be used for the adoption/mainstreaming of the updated Social Enterprise Policy. Social Enterprise Ghana was also in need of tools, frameworks, trainings to support their effort in gathering evidence on the sector, advocating for the sector, supporting social enterprises and becoming a sustainable business member organisation.

OBJECTIVE: The technical assistance was to update and finalise the draft Ghana Social Enterprise Policy of 2017 and to improve the capacity of Social Enterprise Ghana to better support the social enterprise sector in Ghana.

RESULT: The intervention produced an updated draft Ghana Social Enterprise Policy, improved the public private dialogue mechanism on social enterprises and developed an action plan to move the policy forward. It also produced a research framework and resource mobilisation strategy for Social Enterprise Ghana with associated capacity training.

After the intervention, Social Enterprise Ghana guided by the action plan and the resources and tools developed for them, increased their engagement with the Ministry of Trade and Industry – with twice yearly formal meetings – and has regular dialogues with several government departments. It has also taken a broader approach to recognising social enterprises in regulatory frameworks in place. For example, using the updated draft policy, resources, tools (which enabled them to complete a state of social enterprise in Ghana research) from the intervention, it made input on the Ghana start-up bill, a corporate social responsibility bill and one for non-profit organisations. This has ensured greater recognition of social enterprises in the Ghana enterprise ecosystem. Again, using the resource mobilisation strategy, Social Enterprise Ghana has developed a better income model, enabling it to mobilise $200,000 per annum and increase its partnerships by about 60%, including one project with the Mastercard Foundation.

By supporting Social Enterprise Ghana to improve the business environment for social enterprises in Ghana, we indirectly support women’s economic empowerment as 40% of social enterprise leaders in Ghana are women and the social mission of majority of social enterprises focuses on achieving social and environmental outcomes that benefit women.

NAME OF REQUESTER ORGANISATION: Social Enterprise Ghana

PROJECT NAME: Assessing the Feasibility of a Social Enterprise Fund in Ghana

CONTEXT: According to a British Council report in 2016, around 100 social enterprises in Ghana have created a total of around 1,000 jobs, have impacted the lives of more than 100,000 beneficiaries and have generated a combined turnover of £1.4 million (almost 8 million cedis) in a year. Nearly 40% of all the social enterprise leaders are female, almost three times the mainstream business. The biggest barrier to social enterprise development is obtaining grant funding, debt or equity capital, resulting from limited access to investor networks and various other factors. Due to gender bias and family responsibilities, women in Ghana are more likely to have financial difficulties when looking to start a business.

Social Enterprise Ghana, as the national representative body for social enterprises, has an important role to play in addressing the financial challenges faced by social enterprises and is working to develop and advocate for an ecosystem that is fit for purpose. Building on previous work through the ICR Facility to finalise a national Social Enterprise Policy, SE Ghana is now seeking a feasibility study on establishing a social enterprise and innovation fund, with particular emphasis on supporting women and green start-ups.

OBJECTIVE: The ICR Facility is working with Social Enterprise Ghana to explore the feasibility of establishing a Social Enterprise and Innovation Fund, with its focus including women-led and women-focused social enterprises. The objectives of the work have been to:

1. Explore the supply of and demand for finance amongst social enterprises, including those that support gender- and green-related outcomes.
2. Review prevailing investment conditions including legal requirements that relate to the setup and running of a social enterprise fund.
3. Outline the design of a fund, supported by stakeholder research and engagement, to meet unmet financial and non-financial needs amongst social enterprises in Ghana.
4.  Provide Social Enterprise Ghana with a support session and a set of supporting documents to take forward the setup of a Social Enterprise and Innovation fund that supports gender- and green-related outcomes.

RESULT: The project is ongoing and expected to close in September 2024. The setup of a Social Enterprise and Innovation Fund was found to be a feasible endeavour and based on unmet financial demand amongst the country's social enterprises. Social enterprises were categorised on the basis of their size and financial need and it was found that a focus on the smaller businesses, which form the majority, would provide the most potential for impact. A particular need, not met by the mainstream investment market, was found to be long-term and low-interest loan finance. Other shortcomings at the level of the ecosystem were found to be a lack of high-quality investment-readiness support tailored to the needs of social enterprise and a disconnect between Enterprise Support Organisations and investors.

The proposed Social Enterprise and Innovation Fund is organised into three stages: the Setup Phase, the Pilot Phase, and the Maturity Phase. The Setup Phase involves the recruitment of a Fund Management Team and host ESO, as well as fundraising and administrative tasks needed to establish the fund. The Pilot Phase is expected to last 5 years and involve the onboarding of a growing number of social enterprises which each receive a package of financial and non-financial support. It will also involve the upskilling of ESOs in building the pipeline of investable social enterprises and delivering the post-investment support needed. By the time of the Maturity Phase it is expected that the fund will have significantly reduced its dependence on non-repayable income (such as grants and donations) and source the majority of its investment on a repayable basis. This will depend on the fund having proven the commercial viability of its model and its investments during the Pilot Phase. 

In addition to Phase 1 and Phase 2 reports which provide detail on the research undertaken and the evolving development of the fund design, the project will provide supporting documents for SE Ghana including a Resource Mobilisation Plan, a Policy Brief, and an Operational Manual. SE Ghana will be in a position to use these to engage stakeholders and drive the fund forward.