The private sector is talked about a lot as one of the highest potential drivers of growth for the economy, but acess to capital is usually an obstacle in promoting private enterprise. Baah'Wiredu's 2006 budget gives previously unheard of incentive to people interested in launching VC funds, so hopefully this should spur some innovation and private enterprise. One of the highlights is tax deductions for financial institutions who invest in VC subsidiaries (100% of their investment), and the Ghanaweb article also says:
"The incentives are the upfront relief from stamp duty in each year on subscriptions for new equity shares in venture capital funds, the full tax exemption from corporate income tax, dividend tax and capital gains tax for five years and the provision for the losses from disposal of the shares during the tax exempt period to be carried forward to the post-exempt period up to five years."It is great that the government is not putting itself in the middle of this, and is encouraging the private sector to take it up. It does however raise a question someone brought up in a conversation we had. The issue of regulation. The tax breaks are pretty substantial, and we could see a slew of people setting up VC funds to finance (in my friend's words) 'their sister's rice importing business.'
File under: ghana, vc, baah-wiredu