After a cyclical lapse lasting two years, Ghanaian capital markets showed promising signs of a steady recovery during the course of 2017. The first year of the government of President Nana Akufo-Addo has seen an improvement in key macroeconomic indicators and a return to strong growth, which along with the steady issuance of new government bonds, has provided a boost to the Ghana Stock Exchange (GSE).

The GSE is also benefitting from government policies to strengthen and deepen the role played by capital markets in the country’s financial system. “We see the future of the financial sector in capital markets. We want to de-emphasise the dependence on the banking sector, to allow capital markets to strongly support the private sector at a lower cost,” Sampson Akligoh, director of the Financial Sector Division at the Ministry of Finance, told OBG. “However, to do so we will need to harmonise the relationships between regulators, strengthen our major players and use the success of mobile money to ensure greater access to finance, coupled with improved consumer protection.”


In early September 2017 the GSE posted a market capitalisation of GHS58.9bn ($14.1bn), representing an 11.7% increase since the start of the year. However, this upturn follows two years of falling valuations, and the last time market capitalisation was at this level was in July 2015. That year saw the GSE fall 11.77%, whilst 2016 registered a further 15.33% decrease. “In 2015 and 2016 we saw the key market indicators decline,” Ekow Afedzie, deputy managing director of the GSE, told OBG. “This was fundamentally a result of the worsening macroeconomic environment and the fact that 2016 was an election year, which also impacted the level of economic activity,” he added.

As of late December there were 43 stocks listed on the GSE. Broken down by industrial segment, natural resources account for the largest proportion of market capitalisation, while the financial segment is the most traded. In the GSE’s May 2017 monthly report the listed mining and hydrocarbons firms had a market capitalisation of GHS44.39bn ($10.6bn), three quarters of the total value of the country’s stock exchange. UK firm Tullow Oil, one of Africa’s leading oil companies and operator of the offshore Jubilee field, is responsible for GHS28.77bn ($6.9bn) of this total, while South Africa’s AngloGold Ashanti, owner of several gold mines across Africa – including the Obuasi gold mine – accounts for an additional GHS15.07bn ($3.6bn).

However, shares in extractive companies on the GSE are very tightly held, and there were no trades in this segment made in the first five months of 2017. In comparison, the financial sector makes up around 18% of total market capitalisation while contributing over half of all trades made on the GSE. The four largest firms in this segment have market capitalisations of over GHS1bn ($239.4bn) and are also the most frequently traded. According to May 2017 market capitalisations, in order of size, they are Ecobank Transnational at GHS2.65bn ($634.4m); Ecobank Ghana, which stood at GHS2.13bn ($509.9m); Standard Chartered Bank, with GHS1.86bn ($445.3m); and Ghana Commercial Bank, at GHS1.39bn ($332.8m).

In the first five months of 2017 the best-performing stocks overall were those of Benso Oil Palm Plantation, up 71%; Ghana Oil Company, with an increase of 50%; GCB Bank, which rose 47%; and Standard Chartered, up 32%. The biggest declines were recorded by HFC Bank, Starwin Products and PBC, all of which saw their stocks lose one-third of their value during the same period.

Since 2015 Ghanaian companies have also been able to list on the Ghana Alternative Market (GAX), which has lower requirements for listing and reporting. However, as of September 2017 the country’s secondary exchange was made up of just four companies and trading on the bourse was fairly limited.


Despite the improvement in performance indicators over the course of 2017, the GSE faces two principle challenges common to frontier and emerging markets across the continent: improving liquidity and encouraging companies to use public markets to meet their financing needs.

In 2017, riding on the back of stronger macroeconomic fundamentals, the volume and value of shares traded bounced back after a weak 2016. In May 2017 the GSE recorded a daily average volume of 866,478 shares traded at an average value of GHS1.4bn ($335.2m), compared to 447,051 shares worth GHS710m ($170m) a year earlier. Boosted in particular by a bumper February, which saw 161m shares traded with a value of over GHS242m ($57.9m), the first five months of 2017 saw GHS338m ($80.9m) traded, more than the whole-year figures for both 2016 and 2015.

While all of this remains in line with Ghana’s peer markets elsewhere in Africa, such figures unsurprisingly lag behind the continent’s largest bourse, the Johannesburg Stock Exchange (JSE), which had an average daily traded volume of 281m shares in 2015 and peaks of over 1bn daily traded shares. While the JSE is admittedly an outlier among Africa’s capital markets, it is nonetheless worth noting that Ghana’s 11 listed manufacturing companies were the subject of just 79 trades during the first five months of 2017.

“We have a very shallow stock market in Ghana, with limited companies and a serious liquidity problem,” Victor Obeng, director of investment and research for Frontline Capital Partners, a local investment banking and asset management firm, told OBG. “The Social Security and National Insurance Trust have huge holdings in the stock market, and they barely trade. It’s difficult to find blue-chip stocks to purchase for clients,” he .

As is the case throughout much of the rest of the region, the equity market also suffers from the array of attractive debt options, from government treasury bills to bank deposits, that provide investors with both solid and predictable returns. “In 2016 interest rates were over 20%, and investors were attracted to short-term debt instruments,” Afedzie told OBG. “The mushrooming of microfinance companies offering unrealistic returns – often as high as 30% per annum – has also dampened interest in equities.”

In line with most of Africa’s stock exchanges, enticing companies to list can be difficult, and corporate actions on the GSE remain limited. Over the course of 2016 there were two initial public offerings (IPOs) in the financial sector (see analysis) and three rights issues. For the latter, in May 2016 Ghana Oil Company raised GHS176m ($42.1m), Guinness Ghana Breweries tallied GHS180m ($43.1m) and Société Générale Ghana brought in GHS38m ($9.1m).


Perhaps as a side effect of the limited action on the GSE in recent years, some of the firms listed on the exchange fell behind with financial reporting over the course of 2017.

In August 2017 the GSE announced that it would suspend the trading of five stocks for failing to meet their listing obligations. Two firms, Clydestone and Transaction Solutions, were quickly reinstated to the stock exchange after taking the actions required by the regulators. A sixth company, however, the Cocoa Processing Company, was sanctioned in the following days for failing to submit reports or hold an annual general meeting, while in September 2017 UT Bank was delisted after losing its banking licence.

However, the decision is unlikely to have a major impact on the GSE, given that the companies involved are subject to limited trading. Encouragingly, analysts view the decision as an important indication that the regulators are prepared to enforce bourse rules, and some speculate it could present a new opportunity for the stagnating GAX, as companies might see it as an opportunity to move away from the GSE with its stricter reporting rules and rebrand themselves.


The new government has made clear indications that it intends to boost the role of capital markets in the Ghanaian financial sector. In the 2017 budget a five-year exemption on capital gains tax was introduced, as well as a two-year exception on stamp duties for the financial services industry.

Most importantly, the government announced it would encourage a capital markets local content policy to enjoin energy, mining, telecoms and financial firms to list a minimum percentage of shares on the GSE within five years of commencing operations. Similar initiatives have been launched elsewhere in Africa, such as Tanzania, where telecoms providers are now obliged to list a portion of their capital on the local exchange.

The budget also stated the government’s intentions to divest some of its holdings in state-owned enterprises to the GSE and to develop new regulations to govern asset-backed instruments, including real estate investment trusts. “The 2017 budget is an indication of the kind of activities the government and the GSE, in collaboration, are undertaking to improve the local capital markets” Afedzie told OBG. “We are looking to increase the number of traded firms, boost liquidity and introduce new products.”

New Listings

The two-year slowdown on the GSE – and, perhaps more pertinently, the economy more broadly – has limited new listings, although previous years saw announcements for sizeable capital-raising exercises. Mobile phone operator MTN secured a 15-year 4G licence in late 2015 in return for $67.5m and the commitment to offer up 35% of shares to Ghanaian investors. However, the telecommunications giant subsequently announced plans to sell its shares over the counter, and as of late 2017 the details of the company’s entry onto the market had yet to be disclosed.

In 2016 two banks, the Agricultural Development Bank and Nigeria’s Access Bank, held IPOs, and the financial sector looked promising for future listings (see analysis). “With more long-term capital being unchained in the pension system, we need to work on supply, particularly equities and corporate bond. At the moment there aren’t many insurance companies listed, but as the regulators push up capital requirements, we hope to see more insurance firms listing on the GSE,” Afedzie told OBG. “In the longer term, we would like to see more telecoms firms list, but in the short term our focus is on encouraging domestic firms to list on the GAX.”

In June 2016 Capital SME, a partnership between the government, the British High Commission and the private sector, was launched in Accra. The project aims to nurture local small and medium-sized enterprises (SMEs) with the ultimate goal of listing five on the GAX in the first year of operations.


A significant change is afoot as a result of the 2008 National Pensions Act that should dramatically invigorate the country’s trading and investment activity. The act introduced a three-tier scheme for pensions, which allowed for the entrance of private pension fund managers approved by the newly formed National Pension Regulatory Authority (NPRA).

Under the new regulations, 13.5% of salaries in the formal sector go to tier one, a defined-benefit scheme managed by the Social Security and National Insurance Trust – the government body that was previously sole manager of the national pensions scheme. A further 5% of salaries are then mandated to tier two, a defined-contribution scheme managed by NPRA-approved funds. Employees can also contribute on a voluntary basis – up to a further 16.5% of their salaries – to a tax-free contribution scheme in tier three, also run by NPRA-approved funds.

The advantages of this liberalisation have been considerably slower to reach fund managers than was initially hoped, but that could soon change. “When we entered the pensions area in 2010 we had high expectations for the stock market, but the new laws have taken a long time to reach their potential,” Obeng told OBG. “It took a while for the government sector, the country’s largest employer, to engage private fund managers for second- and third-tier schemes. Fortunately, that began to happen in late 2016, and new guidelines mean that a greater proportion of funds can be held in equities,” he added.

In March 2017 the NPRA announced that it was upping the maximum equities portfolio for pension funds from 10% to 20%. In addition, up to 60% of funds can be kept in government securities, 35% in corporate debt entities, 35% in bank securities, 15% in investment schemes and 15% in alternative investments. “We want to attract capital market products like equity and other long-term investments,” David Tetteh-Amey Abbey, deputy CEO of the NPRA, told local media in April 2017. “We believe that with this amount of liquidity with fund managers, companies should be able to list on the equity market,” he added.

Pension fund managers have welcomed the move as well. “The pensions regulator has traditionally favoured government securities ahead of bank securities and equities, but we hope the higher equities allowance will create greater liquidity on the GSE,” Obeng told OBG.


Ghana has been a regular customer on the local and international bond markets in recent years, particularly as the government’s operating deficits continued, and 2017 was no different. At the end of March the country sold $2.2bn in bonds in a single day: GHS1.4bn ($335.2m) was raised from seven-year bonds, while a further GHS3.4bn ($814m) came from the country’s first 15-year bond. Both bonds paid interest of 19.75% and the longer-term product was subject to a major purchase from Franklin Templeton, whose Global Bond Fund is one of the world’s top-performing funds in its category over a 10-year period. On the same day, a 10-year and five-year bond – both at 18.75% interest – attracted GHS3.5bn ($837.9m) and GHS1.5bn ($359.1m), respectively. Over 80% of bids for the four bonds came from foreign investors.

In October 2017 the government issued two bonds with the goal of paying off a large chunk of the GHS10.8bn ($2.6bn) in debts incurred by the state power generation and transmission companies during the energy crisis of 2015. The first, a seven-year bond with a 19% coupon, received GHS2.5bn ($598.5bn) in bids against its target allocation of GHS2.4bn ($574.6m).

However, the second instrument, a 10-year bond with a price guidance of 19.5% that was earmarked to raise GHS3.6bn ($861.8m) had received only GHS902m ($215.9m) in bids as of the end of October.  Following a week-long extension, the government placed GHS2.3bn ($550.6m) at the desired 19.5% coupon rate. An additional GHS500m ($119.7m) worth of bids were recorded, demanding yields as high as 20%, although ultimately these were not accepted.

Fixed Income

The bond market has seen an uptick in interest over the past two years. In August 2015 the Ghana Fixed-Income Market (GFIM) – the country’s secondary market for fixed-income securities – began trading, and one year later the Securities and Exchange Commission approved a manual of rules and good-practice governing for trading on the market.

“Together with the banks and financial institutions, we have created a secondary market for debt instruments,” Afedzie told OBG. “2016 was our first full year of trading on the GFIM, and we’ve seen impressive investor interest in trading debt due to the high interest rates on offer,” he added.

Short-term Treasury bills are the most commonly traded instrument. In 2016 GHS37.38bn ($8.9bn) of 91-day Treasury bills were traded on the GFIM, exceeding the target of GHS29.65bn ($7.1bn), GHS15bn ($3.6bn) of 182-day bills, along with lower quantities of bills with one- to five-year maturities. The market continued to outperform targets in the first quarter of 2017, with a total of GHS10.36bn ($2.5bn) of 91-day bills traded against a target of GHS8.35bn ($2bn). In March 2017 some GHS3.42bn ($818.7bn) worth of 15-year bills were issued, the longest maturity on the market.

Compared to the vibrant government debt market, corporate bonds options are limited for Ghanaian investors. Just six firms have issued bonds, with the largest amounts issued by PBC, at GHS154m ($36.9m); Bayport Financial Services, with GHS129m ($30.9m); and AFB, a consumer finance firm, at GHS82m ($19.6m).

The market could become more popular in the coming years, however, if bank interest rates drop and domestic ratings agencies are established to track products. “The bond market is high on our agenda because at present these instruments are more attractive than equities to Ghanaian investors,” Afedzie told OBG. “In order to build liquidity, we are looking at introducing a new trading platform – separate from the existing Bloomberg, over-the-counter model – that will allow brokers to trade bonds freely and boost liquidity,” he added.

The final instrument traded on the GFIM are cocoa bills. Since 2002 the Bank of Ghana has issued 182-day bills to finance the purchase of cocoa from local growers. In April 2017 the Cocoa Board issued $59m in bills at a domestic auction and a further $1.3bn was anticipated for September.


The Ghanaian capital markets are benefitting from a wide range of reforms that will help loosen domestic capital and improve liquidity, listings and trading. Pension reform, a new drive towards growth led by the private sector in rural areas and a fall in government bond yields have aligned to create fertile ground for the expansion of the sector.

As the country begins a new cycle of growth and investment, the GSE is likely to play an increasingly important role in financing domestic development.