Ghana’s pension funds could unlock up to $1 billion for private capital investment, according to a new report by the African Private Capital Association (AVCA). But despite rapid growth in assets, the industry remains constrained by regulation, structural gaps, and a cautious investment culture.
Between 2020 and 2024, assets under management by Ghana’s pension funds grew from GH₵33.5 billion to GH₵86.4 billion.
Yet, there has been little diversification in the allocation of pension assets. In 2020, securities issued by the Ghanaian government made up 64% of capital allocation; by 2024, that figure had risen to 72.9%. Meanwhile, alternative investments increased only marginally, from 0% to 1.1% over the same period.
This comes despite regulatory efforts to encourage greater allocation of pension assets to private capital.
The report notes, however, that Ghana’s position is not unique. Even in South Africa, which has the largest pension industry on the continent, private equity accounted for just 0.8% of pension assets in 2023, while Kenya and Nigeria recorded allocations of 0.7% and 1.7%, respectively.
Still, there is significant room for growth when looking at utilisation rates. Ghana’s utilisation rate stands at 4.4%, compared to Kenya’s 7.0% and South Africa’s 4.7%, despite both countries having lower regulatory caps.
But there’s a sliver of hope. Of the fund managers surveyed by the AVCA, 24% of them began investing in private capital between 2015 and 2019, while another 28% began doing so between 2020 and 2024. The report paints an optimistic outlook for the country, noting that 33% of respondents are actively searching for their first investments in private capital; only 10% reported not actively doing so.
Ghana’s capital allocators cite currency volatility and data opacity as significant barriers to investing in private capital. Like most African countries, Ghana has seen its currency lose value against the dollar in recent years.
Between 2022 and 2024, the annual depreciation rate of the cedi against the US dollar stood above 19%, causing as many as 63% of survey respondents to remain cautious.
However, data opacity remains a major challenge cited by 58% of respondents.
“Ghana’s private capital ecosystem suffers from fragmented reporting, limited performance benchmarks, and insufficient transparency on fund-level outcomes — issues that constrain due diligence and risk assessment,” an excerpt from the report read.
Other barriers cited by stakeholders include a weak exit environment and political risk. Curiously, while there have been policies designed to increase the participation of pension funds in private capital markets, nearly half (47%) of respondents pointed to regulation as a barrier.
For these respondents, complex licensing processes for private capital fund managers limit investment options, while the absence of limited partnerships was a regulatory flaw cited by 32% of respondents.
Meanwhile, respondents also pointed to the lack of in-house expertise for evaluating and managing private capital investments as a challenge.
Social impact drives investment preferences, with Ghanaian pension managers targeting sectors that align with long-term national priorities. The AVCA survey shows healthcare is the top pick, with 55% of respondents ranking it among their three preferred sectors. Agribusiness (45%) and technology (40%) follow closely.
These choices echo investor sentiment across the region. In Nigeria, for example, infrastructure, agribusiness, and healthcare dominate interest.
Who pension funds invest alongside also matters. Nearly eight in ten managers said they have a preferred investor base, with more than a quarter favouring funds anchored by development finance institutions (DFIs). DFIs are seen as valuable partners for de-risking and bringing credibility to blended finance structures. Another 22% prefer co-investing with at least one other fund manager to share due diligence and align strategy.
When it comes to fund structures, most Ghanaian pension players (39%) prefer the traditional GP–LP model common in private equity globally, but are constrained by current laws that don’t formally recognise limited partnerships.
As pension funds dip their toes into private capital, the managers behind the funds are coming under greater scrutiny. Track record and experience now dominate decision-making. Nearly half of respondents said they prefer general partners (GPs) who have raised four or more funds, citing confidence in their ability to manage risk and deliver consistent returns.
Interest in emerging managers exists, but it’s cautious. About 41% of respondents are open to backing managers with one to three funds, but only 17% have invested in a first-time fund in the past five years. In Nigeria, that number is more than double, at 40%, suggesting Ghana’s market is far more conservative.
Track record remains the single biggest factor influencing investment decisions, cited by 72% of respondents, followed by the strength of GP team relationships (50%).
