A consultant to the Ghana Alternative Market (GAX), David Tetteh, has advised against the practice wherein companies only approach the capital market as a last resort when they are in distress.
Against the backdrop that access to credit has been the bane of many businesses in the country, he noted that the capital market has always been a fertile ground for businesses to attract sound financial investment.
But it appears that some businesses only think of listing on the capital market when going through financial challenges, he said.
Closely linked to this thinking is a culture of many indigenous business owners finding it difficult to open up and share ownership of their businesses with others in order to attract more investment.
These are among a number of factors which have not helped the development and patronage of the GAX introduced about four years ago, he observed.
The GAX is a parallel market operated by the Ghana Stock Exchange, which targets in particular SMEs with potential for growth.
It accommodates companies at various stages of development – including start-ups and existing enterprises, both small and medium.
Mr. Tetteh was speaking at a workshop for journalists, and urged companies to open their doors for investment – particularly when things are working well – in order to be in a good position to manage tough times.
After four years of its existence only four companies are listed on the GAX, with some potential listers going through the processes to be listed by the end of the year. The four listed companies have raised a total capital of GH¢15.68million in equities/shares.
Companies interested in listing on GAX must, among other things, have stated capital of GH¢250,000 at the time of listing; and must have operated for a minimum of one year, as well as published accounts in accordance with the Companies Code 1963, (Act179).
Mr. Tetteh blamed poor patronage of GAX on lack of awareness about its existence and the benefits companies stand to enjoy when hooked onto it.
He mentioned the SME listing support fund as one of the numerous incentives. “Companies listing on GAX can apply for funds under the GAX –SME listing support fund to pay fully or partly for the cost of advisory services. The SEC caps these fees at 5% of total capital raised.”
The Capital Market Consultant expressed optimism of changing the status quo through intensive public education about dynamics of the capital market and its benefits.
He added that the current ‘stable state’ of the economy has what it takes to spur growth of the capital market, saying: “We expect that by 2020 we should have 50 companies listed on the market”.
The training for journalists was jointly organised by the USAID Financing Ghanaian Agriculture Project (USAID FinGAP) and the Institute of Financial and Economic Journalists (IFEJ), in Accra.
It was aimed at broadening the horizons of journalists in agricultural reporting, and training them to sensitise the public on alternative financing sources for agro-based industries.
The one-day workshop was under the theme ‘Enhancing the capacity of Financial Journalists on the Capital Market’.
The Chief of Party-USAID FinGAP, Rick Dvorin, underscored the importance of agro-based leveraging of the capital market to enhance agricultural productivity.
He advised businesses to adhere to best managerial and administrative practices in order for them to attract investors.