Improving the diversification of investment products and the liquidity of the securities market has been a government priority in recent years. One key initiative is the Capital Market Master Plan (CMMP) being implemented by the Securities and Exchange Commission (SEC). The CMMP is divided into three phases – 2020-22, 2023-25 and 2026-29 – and has set a 2024 target of increasing the amount raised via equity to GHS6bn ($545m) per year and the amount raised by bonds to GHS40bn ($3.6bn).
Ghana’s capital markets comprise three main exchanges. The Ghana Stock Exchange (GSE) is the principal one, with a market capitalisation of GHS73.3bn ($6.7bn) as of August 2023. Founded in 2015, the Ghana Fixed Income Market is the GSE’s platform for debt securities, with both government securities and corporate bonds. The Ghana Alternative Market (GAX) – also operated by the GSE – lists companies with high potential for growth, from start-ups to well-established companies, and small and medium-sized enterprises (SMEs). This approach allows investors in Ghanaian capital markets to diversify their portfolios between conventional equities, bonds and high-growth stocks.
Diversification Efforts
Non-residents have been able to invest in the GSE since 2006, opening the market to financing from foreign investors and boosting liquidity. In February 2023 the SEC announced new guidelines covering the registration of securities, the over-the-counter market, note trustees, issuing houses and self-regulatory organisations.
Implementation of the CMMP has been challenging amid the country’s economic downturn. In terms of money raised by equity, the only corporate action taken by a GSE-listed company in 2023 as of August was a scrip dividend by mobile telecommunications company MTN Ghana, a subsidiary of the South African MTN Group, which raised over GHS1.1bn ($99.9m). There have been 32 initial public offerings (IPOs) in total since 1991, the most recent of which was MTN Ghana’s in 2018. The latest issue on the GSE was an introduction of 315m shares at GHS8.87 ($0.81) per share in June 2022 by Asante Gold.
Liquidity Mobilisation
Corporate bonds raised GHS12.7bn ($1.2bn) between 2015 and 2023, which averages to around GHS1.6bn ($145m) per year – falling short of the 2024 target of GHS40bn ($3.6bn). The slowdown in funds raised by corporate bonds continued into 2023, with financial services organisation Bayport Savings and Loans, and local credit provider Izwe issuing bonds in the first eight months of the year, raising a total of GHS75m ($6.8m). In 2022 there was a gap of an estimated $4.8bn between the funds local SMEs need and what they are able to access, and no SME has raised money through an IPO on the GAX since 2018. Accordingly, in August 2023 British International Investment, a UK development finance institution, launched Growth Investment Partners Ghana, a new lending platform with as much as $50m for 150 Ghanaian SMEs.
In terms of sector distribution, the top three sectors together account for 93% of the GSE’s market capitalisation. Of the sectors represented on the GSE, mining was the largest with GHS36.6bn ($3.3bn) as of August 2023, followed by ICT with GHS19.6bn ($1.8bn) and finance with GHS12.2bn ($1.1bn).
In March 2023 Abena Amoah, managing director of the GSE, announced that the exchange was in talks with the government to list 10 state-owned enterprises that year, and in November 2023 the GSE submitted proposals to the Cabinet for approval. Additionally, in January 2023 Telecel Group, a UK-headquartered, Africa-focused telecommunications organisation, bought Vodafone Ghana and indicated plans to pursue an IPO on the GSE. This would put boost the number of companies listed on the exchange by more than 35% and contribute significantly to the SEC’s broader diversification goals.
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