As Ghana confronts the long-term challenge of building a stable, reliable, and affordable energy sector, a policy analyst at IMANI Africa is proposing an unconventional source of capital: the billions of cedis quietly accumulating in the country’s Tier 2 and Tier 3 pension funds.

John Sitsofe Mensah, Associate for Technology Policy and Innovation at IMANI’s Centre for Science, Technology and Innovation Policy (CSTI), argues that Ghana has been sitting on a largely untapped financing opportunity while continuing to court foreign capital for its energy infrastructure. His analysis contends that the regulatory framework governing private pension funds must be redesigned to allow those funds to directly finance critical national infrastructure, beginning with the energy sector.

The Lesson of the Debt Exchange

Mensah draws on Ghana’s Domestic Debt Exchange Programme (DDEP) as a cautionary example. Pension funds heavily concentrated in government securities found themselves earning negative real returns as inflation eroded their value, undermining the long-held assumption that bonds were inherently safe. In his view, the episode demonstrated that conservative investment strategies are not without risk, and that diversification into productive assets is both necessary and overdue.

Under current rules set by the National Pensions Regulatory Authority (NPRA), Tier 2 occupational pension funds and Tier 3 voluntary pension funds operate within restrictive limits that have led to fragmented fund management, repetitive investment choices, and siloed capital that cannot be deployed at scale. The result is a striking paradox: Ghanaian workers’ savings finance government debt, while foreign capital finances Ghana’s power plants.

A Proposal for Consortium Financing

Mensah’s proposed solution centres on enabling pension fund managers to pool resources through investment syndicates. Rather than each fund acting independently within narrow asset classes, he envisions coalitions of five or more major funds combining a portion of their assets to co-finance large-scale infrastructure projects, sharing both risk and returns.

The practical implications, he suggests, are significant. A consortium of funds could jointly finance a 50-megawatt (MW) solar installation in Northern Ghana or a 200MW gas-powered plant in the Volta Region, projects that no single fund could comfortably absorb alone. This model, he argues, would allow domestic capital to compete with the independent power producers (IPPs), often foreign-owned, that currently dominate Ghana’s energy infrastructure.

The Case for Pension Funds in Energy

The energy sector’s financing profile, he argues, is actually well-suited to pension fund investment. Power projects require patient, long-term capital and typically generate stable, predictable returns over multi-decade periods, a better structural match for retirement savings than short-term instruments subject to inflation and sovereign credit risk.

Beyond returns, Mensah points to a broader benefit: deepening local ownership of national assets. Ghanaians would, through their monthly contributions, indirectly own the power infrastructure their economy depends on, rather than that ownership resting with foreign firms whose profits leave the country.

Regulatory Reform as the Critical Variable

Mensah is clear that the obstacle is not capital but policy. He is calling on the NPRA to introduce regulatory carve-outs that permit pooled infrastructure investment, create dedicated infrastructure-focused pension vehicles, and build in appropriate safeguards without removing the flexibility needed for funds to participate meaningfully.

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