A new continent-wide study has revealed that 60% of Africa-specific investment vehicles (IVs) are now domiciled outside the continent, depriving African countries such as Ghana of vital capital flows needed to support small businesses, job creation and inclusive economic growth.
The 190-page report, titled “Study on Africa as a Jurisdiction for the Domiciliation of Investment Vehicles,” was launched at a high-level pan-African webinar co-hosted by the African Capital Domiciliation Cooperation, Mennonite Economic Development Associates (MEDA), and the Africa Impact Investing Group.
The study outlines how Africa’s regulatory and policy environment must evolve to home more investment capital locally, particularly in high-potential markets such as Ghana, Rwanda, Nigeria and Kenya.
“The time is now to strengthen Africa’s competitiveness and increase capital mobilization through the permanentization of strategic investment vehicles,” said Dr. Dorothy Nyambi, President and CEO of MEDA. “Transforming the investment landscape for African-owned and women-led investment vehicles will strengthen MSMEs that create dignified and sustainable jobs for women and youth across Africa.”
Ghana’s opportunity: Becoming a regional investment hub
The report states that Ghana is a promising candidate to become a regional investment hub if it can strengthen its legal, tax and regulatory environment to support the settlement of investment vehicles. This could enable greater lending to micro, small and medium enterprises (MSMEs), which form the backbone of Ghana’s economy but remain severely underserved by traditional financial channels.
“MSMEs are often too large to target microfinance, and too small to attract bank lending, private equity and venture capital,” said Maam Tutua Dudson, lead attorney at Stafford Law and a contributor to the report. “This particularly affects young people and women entrepreneurs who are struggling to start and scale promising businesses.”
Three-year investment policy reform plan
The publication of this study marks the beginning of a three-year effort to drive policy change across Africa. Ghana is one of the focus countries, along with Ethiopia, Kenya, Nigeria, Rwanda, WAEMU countries such as Ivory Coast and Senegal.
“Our collaborative team will work directly with decision-makers to strengthen the regulatory and policy environment,” said Diana Smallridge, CEO of Momentus Global and co-author of the report. “The goal is to make African domiciles more attractive and effective for deploying capital, particularly to women-led and inclusive businesses.”
In parallel, the African Crowdfunding Association will advocate for updates to crowdfunding regulations that allow for more flexible and accessible capital channels to further expand the continent’s investment landscape.
Ghanaian financial leaders speak out
Kofi Finn, Managing Director of Ghana-based Petra Trust, added to the discussion calling for a sustained and concerted national effort to build Ghana’s investment ecosystem.
“Positioning Ghana as a financial hub requires a consistent and collaborative approach by all relevant government agencies and financial sector stakeholders,” Mr Finn said at the launch webinar.
Pan-African momentum grows
The report is part of a broader effort supported by the Mastercard Foundation and led by MEDA in collaboration with global and African investment ecosystem players including Momentus Global, Samawati Capital Partners and Stafford Law.
The study involved over 170 stakeholders, from fund managers and investors to regulators and legal experts, including from across Africa and globally recognized fund dosing centres.
For the future
The findings are expected to lead to further engagement with Ghana’s Ministry of Finance, the Securities and Exchange Commission (SEC) and other regulators in the coming months as stakeholders work to create an enabling environment for mobilizing and retaining capital within Africa.
Dr Nyambi concludes: “Localizing investment funds is not just a technological revolution, but a strategic move that will pave the way for Africa’s economic future.”
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