The CEO of the Private Sector Federation, Nana Osei Bonsu, is calling for pension funds in to be redirected toward building the country’s private sector rather than being locked in government securities.

Speaking on PM Express on JoyNews, Mr. Bonsu said the issue facing businesses is both the high cost of credit and the difficulty in accessing long-term capital.

“Cost of credit is high, access to adequate capital formation is very low, very, very important in our environment. Capital formation is difficult,” he said.

He believes the solution lies in how Ghana manages its pension system.

“Our pension schemes provide long-term capital for everybody, but we have enough, and that’s one of the areas that we propose our meeting with the management team of the government to talk about — how do we increase capital formation?”

Mr. Bonsu explained that the three-tier pension scheme, which the Federation helped develop, was originally designed to allow private sector participation, especially in the third tier.

“We now have a three-tier pension scheme, but we’re not accumulating enough capital,” he said.

He added that “private sector, actually the Federation, was part of the consortium that developed and sought the three-tier pension scheme.”

He revealed that under the current setup, the private sector holds about 35% to 36% of pensions, but that’s not translating into real sector investment.

“Government participates… especially the third tier… We want full participation, additional people participating, to increase the quantum of resources that go into that.”

He criticised current practices where pension fund managers and advisors continue to pour funds into government securities instead of productive investments.

“Most of them are investing in treasury bills and treasury bonds. That is not the private sector. That’s not the reason why the third tier was advocated for.”

He argued that if pension contributions were channelled into local businesses, it would flood the sector with capital, ease access, and bring down interest rates.

“The capital adequacy is critical… If the volume of capital available to the private sector is such that you’ll be begging for investment opportunities, it definitely will make the rate go down.”

Mr. Bonsu’s comments come as businesses continue to struggle with high interest rates and limited financing options, despite macroeconomic gains on inflation and exchange rates.