By Ebenezer Chike Adjei NJOKU
Federated Commodities Ltd. (FedCo) has become the first company to issue and list a commercial paper (CP) on the Ghana Stock Exchange (GSE), a major step in the country’s capital market development that introduces a new short-term financing tool for corporates.
The GH¢72.5million issuance represents the first tranche of a planned 150-day GH¢200million programme, structured to offer short-term funding through regulated capital markets. The company intends using the facility to improve its inventory ahead of the impending cocoa season.
This follows the February 2024 approval of the Commercial Paper Issuance and Admission Rules by Securities and Exchange Commission (SEC), a move that formally recognises CPs as eligible instruments for fund managers.
Designed to provide companies with credible operational records and access to cost-effective, short-term liquidity – between 15 and 270 days – the CP market is expected to serve as an alternative to traditional bank lending.
Speaking at the listing ceremony, Managing Director-GSE Abena Amoah hailed the issuance as a “bold and strategic step” and commended FedCo’s forward-thinking approach.
“This issuance demonstrates your forward-looking leadership, financial discipline and confidence in Ghana’s investment community. This issuance is not just about raising funds; it is also about building trust, transparency and tapping into a broader investor base that is ready to support real sector growth in Ghana,” she explained.
The transaction is widely regarded as a breakthrough that could diversify the country’s capital market and ease pressure on bank lending.
FedCo’s issuance raised considerable interest, Ms. Amoah added, achieving a rate of 182-day Treasury bill rate plus two percent.
“It is our hope that FedCo will be able to raise remaining amounts of the offer size and be able to honour the debt service obligations of the CP as due, to foster market confidence in the shorter fixed income market,” noted James Avedzi Klutse, Acting Director General-Securities and Exchange Commission (SEC) the capital market regulator.
FedCo, a Licensed Cocoa Buying Company (LBC), has seen significant growth since 2017 when it held just 5.7 percent of market share. As of the 2021–2022 season, the company had risen to become the country’s third-largest LBC.
Its sustainability programme currently reaches over 41,000 farmers, improving livelihoods for an estimated 400,000 people nationwide. Investments in local communities, in partnership with other firms, have exceeded US$20million – translating to over GH¢300million in cash and in-kind contributions.
The company is also in the process of diversifying operations beyond cocoa.
“We have set up an 18,000 rice mill operator. We are also in the process of setting up a cocoa processing facility that can add value to our cocoa-rice area,” Mariam Adamu-Zibo, FedCo’s Managing Director, said at the event.
“While cocoa remains our heartbeat, the new measures ensure that cocoa features high in Ghana’s agricultural field,” she added.
The CP issuance is viewed as an opportunity to deepen Ghana’s financial markets at a time when credit to the private sector remains constrained.
Limited credit availability has continually been cited as a persistent barrier to business growth. The SEC hopes that a fully operational commercial paper market will ease this constraint by providing structured short-term debt instruments, complementing the existing bond and equity markets.
John Awuah, Chief Executive-Ghana Association of Banks, delivering the keynote address said the development is timely and necessary.
“We have very limited investment options in the country. This country is very hungry for more investor avenues … and I believe it is on this premise that I’m personally excited about what we are doing today.”
He emphasised that the issuance promotes transparency and accountability.
“By coming on the market, we are communicating to the general public that we are opening up the books to transparency, to accountability, proper reporting – so that investors and market participants will definitely know what is going on,” Mr. Awuah said.
He added that commercial paper could become an important instrument in portfolio diversification and syndication strategies, helping to distribute credit risk across a wider base of investors.
He further stated that the market will be watching closely for maturity of FedCo’s CP first tranche in August 2024. A seamless redemption is expected to build trust and unlock higher volumes in subsequent tranches.
“If you are able to retire this seamlessly, then it is not US$200million we’ll be raising… We will be raising maybe US$400million,”Mr. Awuah noted.
