Accra, Jan. 26, GNA – Stakeholders at an engagement on social enterprise have identified access to financing as essential to the growth and sustainability of social enterprises in Ghana.
They said though most social enterprises were not profitable enough to access traditional financial markets resulting in a financial-social return gap, it was not misplaced to generate enough revenue and attract the right investment to cover costs and grow their activities.
Social enterprises are businesses that tackle social and environmental problems.
They create jobs and generate income but reinvest to support their social mission.
The social enterprise sub-sector in Ghana is confronted with challenges, which impede growth and development, including high cost of credit, inadequate regulation of the sub-sector, and unstable exchange rate.
The stakeholders averred that many social enterprises survived only through the largesse and donations of charitable foundations, and sometimes a handful of high-net-worth individuals who made donations or accepted lower financial returns on their investments in social projects.
They said the lack of funding opportunities was one of the major challenges social enterprises faced, adding that those social enterprises could generate financial returns that would not only make them attractive to investors, but make their enterprises sustainable rather than the over reliance on grants.
The stakeholders, including state and non-state actors, expressed the sentiments at an engagement organised by STAR Ghana Foundation on the theme: “The State of Social Enterprise in Ghana: Challenges and Way forward in financing and creating an enabling environment.”
Among other objectives, the engagement sought to mobilise key stakeholders to explore opportunities for enhancing the effectiveness of social enterprises as a tool for civil society sustainability in Ghana.
Mr Ebenezer Arthur, Chief Executive Officer, Wangara Green Ventures, a climate-focused Fund in Ghana, said typical investors mostly expected a recoup of their monies, which meant that typical Non-Profit Organizations such as Non-Governmental Orgnisations (NGOs) may not be attractive to investors by the very nature of their establishment.
He said there were instances, outside of Ghana, where NGOs set up limited liability companies and attracted the needed investments, adding that the organizations were then able to raise the required capital from banks or investors because their structure met the requirement of capital investors.
He noted that getting investors was key, but even more essential was ensuring proper governance and transparency at all levels and said the level of transparency gave an organisation some mileage as investors considered effective governance structures and controls in financing social enterprises.
Mr Arthur, who was speaking on the requirement needed to access finance by social enterprises, stated that the type of business mattered just as its social impact, commercial viability, and profitability and generally, the accountability and structure of the business model would attract investors.
Mr Ibrahim Tanko Amidu, Executive Director and Principal Technical Advisor, Star Ghana Foundation, said social enterprise had been a sustainable way to fighting poverty and exclusion.
Mrs Catherin Boafo, Chief Executive Officer of Nawtwueni, a Social Enterprise, said: “once you have a good idea, there is a need for revenue mobilisation, which becomes problematic.”
“That is a major challenge confronting the social enterprises ecosystem.”
Mr Samuel Yeboah, Chief Executive Office of Mirepa Capital, an impact investor of early-stage business and Small and Medium Enterprises, said there was the need to reimagine what social enterprise should be and how they could become self-sustaining entities.
He said social enterprises continued to depend on profit-making organisations soreimagining social enterprises would require education and training focus on business models that helped entrepreneurs to be sustainable.
Mr Edward Zu-Cudjoe, Executive Director, Social Enterprises Ghana, said apart from the challenge of little financing instruments and interventions for social enterprises, there was absence of a legal structure, regulatory environment, and policy, coupled with poor support system.
He, therefore, called on the stakeholders to help develop innovative financing tools to finance social enterprises while NGOs identified revenue models beyond grants.