The Ghana Stock Exchange (GSE) has said that it is prioritising the quality of listings rather than quantity of listed equities on the Ghana Alternative Market (GAX), as market watchers enquire about lack of enough options on the alternative market – which has led to the significantly low interest in trading of those stocks.
Managing Director of the Exchange, Ekow Afedzie, speaking on the market’s performance in 2019 and its outlook for 2020 in Accra, explained that what the GAX was established to do is get Small and Medium Enterprises (SMEs) to improve on their corporate governance structures and deepen transparency.
“I stand by the assertion of quality over quantity, because when a company comes out to issue shares to raise money it is not coming from the exchange or some [random] individual; it is coming from investors, and investors are looking for returns.
“So, investors will look at a company they are putting their money into; and it has to be a company that has the potential to make profit, a company that is well-governed,” he said to the B&FT in an interview after a press briefing.
He added that the GSE, in partnership with the International Finance Corporation (IFC), will unveil an incubation programme whereby a few companies will be trained and taken through all these processes – including proper bookkeeping and timely publishing of account statements, and good corporate governance – adding that these will prepare them so that at a certain level they can have a public offer.
Since establishment of the alternative market some seven years ago, only five companies including HORDS Limited, Intravenous Infusions Limited, SAMBA Foods, Meridian Marshall Holdings and Digicut have raised equities.
Out of these five, price changes have been minimal and trading activities in some of them were comparatively low to the main bourse, and zero in January 2020. Only Intravenous Infusion Limited (IIL) saw a few trades in January 2020, which goes to support the complaints of analysts on the market.
The five companies are in manufacturing, education, advertisement, and food and beverages. Critical economic sectors such as agriculture, finance, mining, ICT and distribution are missing; meanwhile, SMEs in the country make up a significant portion of these critical economic sectors.
Mr. Afedzie explained that the GAX is truly an opportunity for SMEs to raise long-term capital, since the requirements for listing on the GAX are relaxed to attract them.
“It focusses on businesses with potential for growth. The GAX accommodates’ companies at various stages of their development, including start-ups and existing enterprises – both small and medium.
“Listing requirements for growth or SME boards are usually more relaxed compared to the main trading boards, with the aim of cutting barriers. For example, to join the Ghana Alternative Exchange (GAX) companies only need GH¢250,000 in capital and 20 shareholders,” he said.