By Prince Antwi
Copyright ghanaguardian
A new study has revealed that nearly 60% of African-focused investment vehicles are domiciled outside Africa, a trend that poses a major obstacle to the flow of capital to small and medium enterprises (SMEs), particularly those owned by women and young entrepreneurs.
The 190-page report, titled “Study on Africa as a Jurisdiction for Domiciliation of Investment Vehicles”, was commissioned by the Mastercard Foundation in partnership with the Mennonite Economic Development Associates (MEDA) and conducted by a consortium of experts from Momentus Global, Samawati Capital Partners, and Stafford Law.
Covering 13 African investment destinations—including Ghana, Ethiopia, Nigeria, South Africa, Senegal, and Morocco—the report examines the potential benefits of domiciling investment vehicles within Africa and offers recommendations to strengthen regulatory and business environments.
According to the study, countries such as Ghana, Cape Verde, Uganda, and Rwanda have shown strong potential by proactively creating regulatory frameworks to attract foreign capital and support pan-African investment vehicles.
Dr. Dorothy Nyambi, President and CEO of MEDA, stressed the importance of reform, saying:“It is time to enhance Africa’s competitiveness and increase capital mobilisation through strategic investment vehicle domiciliation. Transforming the investment landscape for African-owned and women-led investment vehicles will strengthen MSMEs that generate dignified and sustainable jobs for women and youth across Africa.”
The report recommends that Ghana adopt reforms such as passing a Limited Partnership Law and a Trust Law to expand the range of legal structures available to fund managers and investors. It also calls for the creation of an Accra International Financial Centre framework to provide a dynamic, investor-friendly business environment.
Stafford Law’s Lead Counsel, Maame Tutua Dadson, highlighted domiciliation’s potential to address youth unemployment by improving access to capital:“Africa’s youth face significant barriers to decent work. MSMEs are effective at producing inclusive jobs but have limited access to affordable finance. That is hindering African entrepreneurs from starting, growing, and scaling high-potential enterprises.”
The study is part of a three-year initiative led by MEDA to apply lessons from the Mastercard Africa Growth Fund in catalyzing risk capital. Over the next year, the initiative will engage regulators in Rwanda, Ethiopia, Ghana, Kenya, Nigeria, and WAEMU countries such as Senegal and Côte d’Ivoire to promote policies that support domiciliation.
In addition, the African Crowdfunding Association will work to improve crowdfunding regulations, expanding financing options for African investment vehicles.
Diana Smallridge, CEO of Momentus Global and a contributor to the study, emphasized the collaborative approach:“Our team will be engaging directly with decision-makers to enhance their regulatory and policy environments to be more welcoming to African domiciles that strengthen the capacity of investment vehicles to deploy more capital and expand access to funding for women-led enterprises.”
The findings were launched during a pan-African webinar co-hosted by the Collaborative for Fund Domiciliation in Africa, MEDA, and the Africa Impact Investing Group, in partnership with the African Venture Capital Association (AVCA) and the African Venture Philanthropy Alliance (AVPA).
