Pension Funds: Ghana’s Most Suitable Funding Option for the 24‑Hour Economy – Here is Why

Although Ghana’s flagship 24-Hour Economy initiative has been officially launched amid pomp and pageantry, some critical questions remain answered about the funding route of the initiative.

Analysts, finance experts, economists and many Ghanaians have rallied behind the initiative, believing it is the antidote to the country’s economic woes. The secretariat has been lauded for the strategic thinking and the visionary nature of the policy.

The landmark initiative, officials say, has the potential to generate 1.7 million quality jobs and turn around the infrastructural landscape of the country with the ambitious Volta Economic Corridor, which draws on the old vision of Ghana’s first President, Dr. Kwame Nkrumah.

Touted as transformative and visionary, the outstanding question many are asking is, Where is the money to fund this initiative?

Works done by the Secretariat estimate that the vision will require about $4 billion to fund it, and the government has committed to providing a seed fund of $300 million. The rest, officials say, will be funded private sector and the Ghana Infrastructure Investment Fund (GIIF).

Already, some experts have started to raise questions about the adequacy of the $4 billion and the feasibility of the funding route, considering the ambitious nature of the programme.

The government has been advised to look at alternative funding sources which promise more stability and guarantee to fund the initiative. One of such sources of funding is pension funds.

Why Pension Funds Make Sense

Finance experts such as the Head of Finance at Merban Capital, Nelson Cudjoe Kuagbedzi, strongly believe pension fund is the way to go. Nelson Cudjoe is of the view that considering the nature of the projects and the amount of funding required, Ghana’s best bet is leveraging on pension assets to fund this economic transformation agenda.

He reveals Ghana’s pension funds are estimated to hit a whopping GHC 100 billion by 2025 and therefore offers a golden avenue to tap into the domestic wealth to fund growth.

Checks by The High Street Journal reveal pension funds offer numerous benefits if tapped into. Let’s take a look at a few of them.

This avenue offers long‑term capital with steady returns. Experts say pension funds invest for decades, matching the duration of infrastructure outlays, like energy, transport, and security upgrades, needed in a 24‑hour economy.

There is also room for a reduced dependency on external debt. With global borrowing becoming costlier and less reliable, domestic pension assets provide a stable, sovereign alternative. This means Ghana can fund massive infrastructure projects without increasing its debt burden with costly foreign loans.

It is a win‑win for workers and national growth. Projects backed by pension funds generate income (e.g. tolls, utilities) that fund retirements, creating mutually reinforcing benefits.

What Could Go Wrong?

Despite the opportunities available with the use of pension funds, it is not without risks. Some of the challenges that could be encountered include;

Political or execution risk: Infrastructure in emerging economies is vulnerable to delays and changes in regulation or leadership, which can bite investments

Liquidity constraints: Pension assets are locked in for retirees, and exiting long-term projects early can incur losses.

Governance gaps: Considering Ghana’s history with corporate governance, without strong controls, conflict of interest or mismanagement can threaten pensioners’ savings

Are there Global Precedents?

There are numerous examples of how countries across the world have leveraged pension assets to fund their economic development agenda.

For instance, Nigeria & South Africa have utilised pension funds to finance roads, power plants, and renewable energy. All these projects aligned to national needs

In addition, the Kenya consortium is another example. Institutional investors channelled about $500 million into infrastructure in just three years

Moreover, the megafunds of Canada and Australia also shows the way. These countries pooled large pension assets to invest significantly in economic infrastructure such as airports, toll roads, and energy. The projects are now delivering stable returns while boosting economic growth

The Safeguards Needed

Despite the challenges, Ghana can navigate and deploy its pension assets in a way that can be mutually beneficial to both the country’s economic agenda and pensioners.

For instance, dedicated regulatory frameworks with clear rules will be needed to channel pension funds into prioritised national projects. Strict adherence to corporate governance safeguards will be required.

There should also be an independent investment oversight. Specialised boards with the requisite expertise must be put in place to evaluate projects on risk, return, and compliance.

To mitigate risk, a diversified allocation of the funds will be paramount. For instance, there could be capping exposure of about 5–10% of assets, to balance growth and protection, as done in OECD countries.

The Bottomline

Nelson Kuagbedzi touts the 24‑Hour Economy as transformative, driven by robust job creation. His pension-fund financing proposal isn’t just fiscal ingenuity; it also reflects global best practices adapted for Ghana’s context.

However, its success will heavily depend on design, discipline, and discipline again. Ghana’s pension savings could be the seed capital that launches this economy, if only it’s invested wisely, with accountability and vision.

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