As local businesses continue to explore avenues to fund their business activities, operators of sole proprietorship businesses have been asked to consider converting to limited liability companies to deepen their chances of ensuring business sustenance and attracting the right investment.
Many Ghanaian-owned businesses do not survive the first generation. From agriculture, banking to real estate, many such enterprises have either collapsed or are currently a pale shadow of themselves after their founder’s demise.
But Mr. David Tetteh, a consultant to the Ghana Stock Exchange (GSE) and Ghana Alternative Market (GAX), said for businesses to achieve long-term sustainability it is necessary to open-up for investment.
“If you become a public limited liability company, you are then able to find more patient long-term capital to join the business. In addition to that, some of the requirements related to corporate governance help the business to position itself for long-term sustainability,” he stated.
He noted that there are several examples of local businesses, now limited liability companies, which are doing well – adding that the time is right for family-owned individualised business to emulate these examples.
Mr. Tetteh, who spoke to the B&FT at a workshop to educate participants on the need to leverage the capital market to drive business growth for enhanced economic development, noted that for some of these local businesses to be able to do this, they will require the help of business-advisers.
He maintains that managers of GAX seek to get more indigenous businesses to list on the market and is hopeful that the target of getting 50 businesses to list on the GAX by 2020 is still on course.
The workshop was organised by the USAID Financing Ghanaian Agriculture Project in collaboration with the Ghana Stock Exchange, with support from the Ghana Chamber of Commerce and Institute of Financial and Economic Journalists (IFEJ).
It promoted competitive sources of alternative financing and opportunities for Ghanaian businesses. The event included presentations on the benefits of listing securities on the GSE, GAX and Ghana Fixed Income Market (GFIM).
The Acting Chief of Party-USAID FinGAP, Dr. Victor Antwi, noted that businesses and entrepreneurs in the country are capable of producing goods and providing services for Ghana and beyond – but will need proper investment to do so.
“Ghana is endowed with huge human resource capital and other natural resources which need to be harnessed in order to achieve this goal,” he added.
He said the USAID FinGAP, implemented by the Palladium Group, addresses a key constraint restricting the development of commercial agriculture and food security in Ghana, and emphasised that access to finance is necessary to enable investment in agricultural value chains.
Among others, he noted that the securities markets in Ghana represents an important alternative form of financing for the capitalisation of businesses.
“To facilitate sustainable financing of businesses to enhance economic growth, there is a need to deepen the quest for other competitive sources of financing – especially the capital market which supports medium- to long-term financing of investment opportunities,” he said.
Through Feed the Future, the US government’s global hunger and food security initiative, USAID FinGAP works to increase access to finance for agribusiness and smallholder farmers to improve agricultural productivity, enhanced food security and promote inclusive economic growth.
To date USAID FinGAP has unlocked over US$158million in private capital for 2,846 agribusinesses, with 40 percent being female-led enterprises. These development efforts have reached over 162,000 smallholder farmers in the maize, rice, and soy value chains.
USAID FinGAP is also pursuing the development of alternative sources of financing for agribusinesses through the listing of debt or equity securities on the GFIM and GAX.