Interview: Kofi Yamoah

What can be done to help further incentivise initial public offerings on the GSE in 2018?

KOFI YAMOAH: The exchange will continue to promote listings through education and awareness campaigns, which should emphasise the benefits of raising capital and listing on either the main market or the Ghana Alternative Market (GAX) for small and medium-sized enterprises (SMEs). We accomplish this goal through increased research, publicity and advertisement. We have also created a listing support fund to facilitate the preparation of SMEs for the GAX, and have introduced a discount regime on listing fees for both new issuers and sponsors of potential companies.

In addition, there is strong support among a diverse network of policymakers and regulators for the implementation of a national initiative that encourages a capital markets local content policy. This policy enjoins companies operating in the energy, financial services, telecoms and mining sectors to list a minimum percentage of their shares on the GSE within five years of commencement of operations.

The year 2018 is expected to be exciting in terms of primary market activities. Banks are also likely to increase their stated capital from GHS120m ($28.7m) to GHS400m ($95.8m). We expect to see a major telecoms listing and several SMEs have signalled their intention to take advantage of the benefits of the GAX. Issuance and listing of corporate fixed-income securities nearly doubled over the 2016-17 period, and we expect the trend to continue, especially as interest rates and other macroeconomic fundamentals remain stable or improve. The exchange’s target is four new listings on both the main market and the GAX.

How can an increase in trading be encouraged on the Ghana Fixed-Income Market (GFIM)?

YAMOAH: Trading on the GFIM has seen tremendous growth since inception. The face value of securities traded since August 2015 proves this point, with the numbers increasing from GHS9.6bn ($2.3bn) in 2015 to GHS15.6bn ($3.7bn) for 2016 and GHS24.4bn ($5.8bn) for the year to November 2017.

The trend is expected to continue on the back of declining interest rates, the government’s move to lengthen the maturity profile of its securities and the ability of non-resident foreigners to now participate in two-year government securities.

In addition, the e-bond platform for trading fixed-income securities has been interfaced with the Central Securities Depository to allow for a seamless flow of trades for settlement. On top of that, the GSE has added a bond module to its trading platform, which allows dealers who cannot access the e-bond platform for trading fixed-income securities to be able to do so at no extra cost. In 2018 the Ghanaian market will work to introduce securities lending and borrowing, as well as repurchase agreements. It is expected that together all of these initiatives will help provide the needed stimulus for even more significant growth within Ghana’s fixed-income market.

What would be the benefits of a potential demutualisation of the GSE?

YAMOAH: Demutualisation has been on and off the drawing board for some time. Under an intended three-year strategic plan, a definite decision will be made on demutualisation. If we do decide to go that route, key potential subscribers to GSE shares will be from the list of licensed dealing members, GFIM dealers, associate members and listed companies. So in that regard, these stakeholders will become shareholders and share in the fortunes of the GSE. Demutualisation will also mean that the GSE will cede some of its self-regulatory powers to the Securities and Exchange Commission and become much more commercially oriented. Regarding corporate governance, the GSE, irrespective of demutualisation, will continue to make sound corporate governance an important goal.