Interview: Abena Amoah
How is public policy positioning Ghana’s capital markets as an attractive investment destination?
ABENA AMOAH: Ghana’s stable political environment and continued economic growth over the years have created a favourable environment for investment. Efforts to attract more listings and increase market liquidity provide opportunities for both local and international investors to participate in the country’s capital markets.
Launched in May 2021 the Capital Markets Master Plan 2020-29 seeks to improve the diversity of investment products and the liquidity of the securities market; widen the investor base; strengthen infrastructure; improve market services; and bolster regulation and enforcement. A significant step forward is the introduction of a dedicated market for green and sustainable bonds. This move underscores Ghana’s commitment to sustainable finance and allows issuers to list green and sustainability-themed bonds, which not only contributes to resource mobilisation but also aligns with global sustainability goals.
The Ghana Investment Promotion Centre offers various investment incentives, including tax breaks, exemption from import duties on machinery and equipment, and repatriation of profits. Emphasising the development of roads, ports, energy and telecommunications infrastructure is crucial to fostering a conducive environment for investment. Additionally, Ghana possesses untapped potential in renewable energy, specifically solar and wind power. Encouraging investment in these sectors can be achieved through the implementation of incentives and favourable regulatory frameworks.
To what extent can diversification of investment products improve market confidence?
AMOAH: By diversifying their investment portfolios across various asset classes, investors can reduce their exposure to specific risks associated with individual securities. This risk mitigation strategy attracts more cautious investors who prefer balanced portfolios, thus increasing overall market participation and liquidity. Diversified investment products attract a wider range of market participants, including individuals, institutional investors and traders. A larger pool of buyers and sellers in the market makes it easier to buy or sell securities at desired prices, resulting in improved liquidity.
When the securities market offers a variety of investment products, it becomes more appealing to both domestic and international investors. The inflow of foreign investment enhances liquidity and boosts market confidence. Diversification can help minimise risks associated with concentrated investment and reduce the impact of individual security price fluctuations on the overall market. In turn, this resilience helps to increase market confidence, as investors are assured that volatility in a few securities will not have a significant impact on the market as a whole.
What impact will technology have on the future of securities trading on the local capital markets?
AMOAH: Technology is expected to have a significant impact on the future of securities trading in the local capital markets. It can bring greater efficiency, accessibility, transparency and innovation to the trading process. Electronic platforms, such as online brokerage systems and trading portals, allow investors to buy and sell securities electronically, reducing the need for manual trading methods. These platforms provide real-time market data, order execution and trade settlement, making trading more efficient and accessible. Furthermore, automated systems make trading more convenient for stockbrokers.
Mobile trading applications promote convenience, ease of use, and increased participation in the capital markets. Ultimately, technology can enable access to educational resources, research tools and analysis platforms, as well as company information and financial and research reports, which empower investors to make informed decisions and increase market transparency.
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