Savannah Impact Advisory Launches $35 Million Ci Gaba Fund of Funds to Transform West African Capital Markets

Savannah Impact Advisory has successfully announced the first close of its groundbreaking Ci Gaba Fund of Funds, securing $35 million. This significant milestone marks the establishment of West Africa’s first domestically domiciled private fund of funds, aimed at directing local institutional capital, particularly pension assets, toward small and medium-sized enterprises (SMEs) across the region. The fund’s ambitious goal is to achieve a final close of $91 million, facilitating investment in key markets including Ghana, Nigeria, Senegal, and Côte d’Ivoire.

A Policy-Driven Shift in Ghana’s Investment Landscape

The debut of the Ci Gaba Fund of Funds coincides with an important policy transition within Ghana. Under the Ghana Venture Capital and Private Equity Compact, pension and insurance funds are mandated to allocate at least 5% of their assets to private markets by 2026. This is a remarkable increase from current allocations, which languish below 1%, even though regulations allow for allocations as high as 25%.

With Ghana’s pension assets forecasted to surpass $9 billion by 2025, achieving a 5% allocation could potentially unleash approximately $330 million in long-term capital for local businesses. This funding is crucial for sectors with high growth potential such as fintech, agribusiness, clean energy, healthcare, education, and light manufacturing. The new policy landscape is fostering the emergence of platforms like Ci Gaba, designed to help institutional investors fulfill these new allocation requirements.

Overcoming Barriers to Private Market Participation

Even with the policy shifts, many pension schemes face operational and expertise-related hurdles that hinder their entry into private markets. Key challenges include:

• Difficulty in evaluating and underwriting venture capital and private equity fund managers
• Managing foreign-exchange risks
• Structuring and overseeing governance for illiquid assets

Consequently, pension portfolios have largely remained focused on government securities, even as regulatory changes seek to promote diversification.

The Ci Gaba Fund of Funds is strategically structured to address these barriers. By serving as an intermediary platform, it:

• Conducts thorough manager selection and due diligence
• Assembles a diversified portfolio of underlying private funds
• Mitigates risk concentration for institutional investors
• Provides a more straightforward, lower-risk approach to meet allocation mandates

This “mother-fund model” is instrumental in lowering entry barriers and fostering the development of West Africa’s alternative investment ecosystem.

Key Investors Demonstrate Market Confidence

The initial close attracted a diverse consortium of notable investors, underscoring robust institutional confidence in the model. Among the major participants are:

• FSD Africa Investments
• Small Foundation
• Stanbic Investment Management Services
• CAL Asset Management
• FMO (the Dutch development bank)

Notably, over two-thirds of the committed capital stems from Ghanaian pension funds, signaling a positive response from domestic institutional investors to the government’s policy shifts and an earnest effort to diversify beyond conventional asset classes.

Hamdiya Ismaila, CEO of Savannah Impact Advisory, highlighted the fund’s mission-driven essence, emphasizing that mobilizing local capital goes beyond mere financing; it aims to transform markets, enhance investor confidence, and empower African businesses for sustainable growth.

Challenges and Future Prospects

Despite the encouraging policy environment, transitioning to private market participation poses significant challenges. Pension funds, by nature conservative, are now tasked with allocating to higher-risk, illiquid asset classes during a period of recovery from cedi volatility and domestic debt restructuring. Skepticism among trustees and limited technical skills may hinder widespread adaptation.

Nonetheless, Accra’s progressive policy landscape sets an encouraging precedent for institutional capital allocation, catalyzing the development of specialized financial intermediaries capable of managing long-term investments. The success of the Ci Gaba Fund will depend on its ability to:

• Deliver competitive commercial returns
• Demonstrate tangible economic impact
• Cultivate investor confidence in private markets
• Enhance regional investment infrastructure

If realized, Ci Gaba could serve as a model for mobilizing domestic savings across Africa, showcasing how locally sourced retirement capital can be harnessed to drive regional industrialization and SME growth.

A Transformative Moment for West Africa’s Investment Landscape

The launch of the Ci Gaba Fund of Funds signifies a pivotal shift in West Africa’s financial architecture. Supported by a forward-thinking policy framework and bolstered by both domestic and international institutions, Ci Gaba is well-positioned to unlock vital capital for SMEs and transform the private market landscape across the region. Its performance will be closely monitored as a potential blueprint for leveraging African pension wealth to foster sustainable economic transformation.

For more insights on the impact of private equity and venture capital in West Africa, you can visit Innovation Village or Startup Researcher.