Friday, November 11, 2005

Ghana's 2006 budget encourages Venture Capital Funds

Business News of Thursday, 10 November 2005

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


joyfish said...

Hi Belle,

Thanks for your informative posts. Have you lived in Ghana?

Belle said...

yes joyfish, i'm ghanaian and lived in ghana most of my life.

Ghana School Days said...

But poverty hinders literacy, right?

I've started a blog which I'm moveing to Blogger because the former seems to lack ftp.

african music and internet marketing company said...

That's good news, now African businesses like the African online TV start-up dont have to look up somewhere else for investment or funding.