Debt Crowdfunding: Fixed Returns from Ghanaian Businesses

What is a bond or debenture?

When you invest in a debt campaign, you are lending money to the business. In return, the business pays you a fixed interest rate (the coupon) at regular intervals and repays your principal at maturity. It feels closer to a fixed deposit than to equity, but unlike a bank deposit, there is no deposit insurance and you cannot walk away easily if you change your mind after the cooling-off period.

Plain vanilla bonds on Ardent CrowdFund

SEC Ghana Crowdfunding Guidelines 2024 permit “plain vanilla” bonds, simple debt with a fixed rate, defined maturity, and full principal repayment at maturity. What you see in the offer document is what you should expect; read the schedule and covenants carefully.

How to read a repayment schedule, with a worked example

Suppose you invest GHS 10,000 at 20% per annum over 24 months with quarterly interest payments and principal at the end. A simplified view (figures rounded for illustration, always use the issuer’s exact schedule):

Your actual coupon may be calculated on a daily or monthly basis as stated in the offer document, the table is to show the idea: fixed dates, predictable cash flows until default risk appears.

Secured vs unsecured debt, a material difference

Secured debt (for example, a debenture with a charge over specific business assets) gives investors a clearer recovery path if the company struggles, subject to the legal ranking of creditors and enforcement. Unsecured notes rely on the issuer’s general ability to pay; if the business fails, you may rank behind secured creditors and get little or nothing back. The offer document should state whether security exists and what it covers. Do not assume “debt” always means “safe.”

Why debt crowdfunding rates are higher than bank savings

Typical bank savings rates in Ghana are often in the 10–18% range; debt crowdfunding targets may be higher (for example 18–28% in many campaigns) because you are not getting “free money”; you are being compensated for at least three things:

• Illiquidity: your money is committed for the term; there is no ATM withdrawal.
• SME credit risk: small businesses fail more often than large banks; default is a real scenario.
• No deposit insurance: unlike an insured bank balance, your principal is at risk if the issuer cannot pay.

Tax on interest in Ghana

Interest you earn on debt investments is generally subject to Ghanaian income tax under the Income Tax Act, 2015 (Act 896), in line with your personal circumstances. Ardent can provide statements to help with filing; speak to a tax adviser for your own position. Compare that net-of-tax return to your savings rate when judging whether the extra risk is worth it for you.

What happens if the business defaults?

If an issuer misses a payment, we notify investors, document the default, and pursue remedies in the offer document (which may include security enforcement where applicable). Recovery is not guaranteed. That is why the higher coupon exists, price the risk honestly before you invest.