Government commits $10 million to entrepreneurship fund

Government has announced a $10 million seed money for the establishment of a National Entrepreneurship Fund (NEIF).

Speaking at the launch of the National Entrepreneurship and Innovation Plan (NEIP) in Accra, President Akufo-Addo said the seed money should be leveraged to raise money from private sources and public organisations to the tune of $100 million to fund its programmes.

The NEIP is expected to be the primary vehicle for providing an integrated, national support for start-ups and small businesses.

Rationale

“The plan will enable new businesses to emerge and give them the space to grow to receive financing and business development services to secure markets during the critical formative years, and to tap into a wide supply chain and network during their growth years, helping to create jobs at a widely distributed, national level,” he explained.

Also, he said it was intended to “stimulate private sector growth at the early-stages of businesses to accelerate job creation and provide entrepreneurial Ghanaian youth with a critical alternative to salaried employment.”

He said this would help their businesses to grow and compete domestically and internationally.

Tax incentives

Among others, the NEIP would provide tax incentives for start-ups owned by young entrepreneurs, incentivize and partner private sector investors to set up business Incubator Hubs and Industrial Parks for youth-owned businesses nationally, establish a Youth Enterprise Fund, which will be leveraged to attract private capital to fund start-ups.

It is also aimed at providing a ready market for the products and services of start-ups through the reservation of a percentage of the proposed 70% of local content public procurement contracts, implement a Buy-Local policy for ICT services from youth-owned businesses and set up an Industrial Sub-Contracting Exchange to link large industries with small businesses and start-ups as a supply chain for goods and services.

Current State

“We have begun to act on the fundamentals. We are stabilising the macro-economy and the cedi. Inflation has gone down from 15.4% in December 2016 to 12.1% in June 2017, i.e. a period of six months, the lowest in four years. The benchmark 91-day Treasury Bill (T-bill) rate was 22.8% in January last year, and has narrowed to 11.9% in June 2017, the lowest in 5 years,” he noted.

He also stated that “we have abolished a lot of taxes such as the 1% Special Import Levy, 5% VAT on Real Estate sales, 17.5% VAT on domestic airline tickets, 17.5% VAT on financial services, 17.5% VAT on selected imported medicines that are not produced locally, and have re-introduced the 3% flat VAT rate for traders.”

Confidence

Even though President Akufo-Addo acknowledged the fact that some traders were having problems with the re-introduction of the 3% flat VAT rate, he noted that “I am confident that as time goes by, the objectives of the policy will be better appreciated and embraced. Very soon, we shall reap the benefits of more jobs and an expanding economy.”

Passion

“I am passionate about the plan working. I am investing a lot in it, and I have confidence in the Minister for Business Development, Ibrahim Awal Mohammed, who has devised the Plan and will be in charge of seeing it to fruition,” he emphasized.

The NEIP comes in three modules.

It includes NEIP Incubation Programme, NEIP Industrialization Plan (greenhouse project and 10 sub-contracting industries, as well as NEIP Youth Enterprise Fund (YEF) and business advisory.

Under the Incubation Programme, startup businesses would be held to survive the initial pitfalls of entrepreneurs.

It is intended to provide young businesses with the tools and support they need to become successful, while the Industrial Plan is an ambitious approach to farm fruits and vegetables in a controlled environment.