Unless government commits new funds to the Venture Capital Trust Fund, the latter will not be in a position to back viable businesses in the country this year.

Started in 2004 by the passage of the Venture Capital Trust Fund Act 2004 (Act 680), one major weakness of the fund has been the shortage of steady flow of capital which is threatening its operations.

After an initial funding of GHC22.4 million was provided to the fund, it has received no new funding, CITY & BUSINESS GUIDE has gathered. This is due to the fact that government has resorted to supporting the trust in ‘tots’ over long periods.

The fund, which is in need of a permanent funding source, has been able to commit US$17 million to businesses since 2003. Since then, its investment portfolio has grown to US$57 million.

Meanwhile, Daniel Duku, CEO of VCTF, speaking to journalists in Accra lately, said VCTF has concluded a US$150-million funding deal with the China Exim Bank to enable it leverage limited government funding to attract foreign investments to boost the economy.

He indicated that the fund was expecting approval from the Minister of Finance & Economic Planning to complete the required documentation to kick-off the funding agreement for disbursement. The disbursement would be supervised by MoFEP.

He said that the fund needs to set a pace for other investors to follow by defining industry standards, developing fund management talents, attracting foreign direct investments and setting larger funds.

Some stakeholders have argued that a steady permanent source of funding is needed to justify the long-term sustainability and survival of the Trust Fund and replace the annulled National Reconstruction Levy.

VCTF has five fund managers and several partners that together channel financial commitment to SMEs by investing both equity and quasi-equity capital in businesses.