Capital Markets
From The Report: Ghana 2014
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For a frontier market, Ghana’s banking system is very developed. The sector has expanded rapidly over the past 20 years, and a number of new banks have been licensed. Six domestic banks were established in that time, while in the 1990s several foreign entrants moved in. Though most of the fundamentals are healthy, there are still a number of challenges that limit overall efficiency and performance. The sector remains unusually fragmented. On the other end of the spectrum, despite the existence of specialist rural banks and non-bank financial institutions, much of the country remains unbanked. As the sector consolidates, banks will get stronger and will be better able to take on larger deals; as regulations are refined, it will be better able to withstand shocks.

This chapter contains interviews with Kofi Wampah, Governor, Bank of Ghana (BoG); and Archie Hesse, CEO, Ghana Interbank Payment and Settlement Systems (GhIPSS).

Articles from this Chapter

Overview

Recent reforms are likely to boost stability and draw in capital
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Benefitting from a broader increase in interest in frontier economies and strong headline growth, Ghana’s capital markets have performed well in recent years, with the Ghana Stock Exchange (GSE) Composite Index up 71.81% in 2013. Secondary listings and new initial public offerings (IPOs) and funds have increased investor options on the bourse, while a number of reforms have also been implemented and continue to be undertaken that could improve the soundness and stability of the sector over the…

Analysis

Venture capital and private equity provide financing options for smaller firms
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As in many emerging markets, small companies, start-ups and entrepreneurs have a difficult time raising funds in Ghana, particularly given the high interest rates for commercial loans. The stock market – where listing can be challenging for a smaller firm and where trading is minimal – is also not currently a practical avenue for early-stage funding. The main board is dominated by larger firms, including secondary listings from foreign firms such as Tullow, which limits space for smaller players.…

Analysis

Strengthening the integration of regional markets
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Integration in West Africa has come in fits and starts, and with varying levels of success. With two large economic blocs – including the 16-member ECOWAS grouping and the smaller subset of Francophone members, the 8-member West African Economic and Monetary Union (Union Economique et Monétaire Ouest Africaine, UEMOA) – West Africa has a variety of agreements in place that stitch together its constituent countries. There is a common external tariff, for example, throughout ECOWAS, and within…

Interview

OBG talks to Sam Mensah, Chairman, Ghana Stock Exchange Council
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Interview:Sam Mensah How can the integration of regional stock exchanges benefit ECOWAS overall? SAM MENSAH: Financial markets have a broadly positive impact on development due to the economic functions they play: mobilisation of resources, provision of investment opportunities and risk management. But the ability of the markets to deliver those benefits really depends on their structure. A number of constraints can hinder the development of some markets. One such constraint is size – if…

Interview

OBG talks to Doug Lacey, Partner, LeapFrog Investments
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Interview:Doug Lacey How do Ghanaian companies assess the various financing options available to them? DOUG LACEY: Relative to Europe and North America, Ghana has a large number of family-owned businesses, and these tend to approach capital raising and partnering very differently. The two fundamental challenges are, first, owners’ reluctance to open up their business dealings to an outsider, and second, their wish to maintain control. In fact, this makes private equity an attractive source…