Non-resident foreign investors hold about 75% of the total number of issued shares on the Ghana Stock Exchange (GSE), the Acting Director General, Dr. Nii Kwaku Sowa, has stated.
"These outstanding shares are not available for acting trading on the exchange; thus contributing to liquidity problems on the stock market."
Dr. Sowa revealed this in the Security and Exchanges Commission (SEC)'s 2005 annual report, which was released last week.
The problem is more compounded with only 1.5% of Ghanaians involved in the capital market.
"However, with good benchmarking, adequate resources and concerted effort from all stakeholders, this gap can be bridged within the shortest possible time."
He stressed it was SEC's determination to raise the level of participation to at least 15% of the population in the next five years.
Under this policy objective, Dr. Sowa said the Commission would solicit the involvement of market operators to expend its operations to other parts of the country to help grow the market.
"Market operators would be made to understand that modern business is about collaborating to compete," he added.
Remote as it may seem under the present circumstances, he said the Commission will continue to explore the possibility of introducing and regulating the use of information or Internet technology to make buying and selling of securities accessible to a wider section of the Ghanaian public in all the regions of the country.
Touching on the increasing listing of local companies on the GSE, he said it is obvious that one of the best ways to increase the supply and float of shares as well as total holdings by Ghanaians is to encourage listings of local companies on the GSE.
However, he explained that this may be quite difficult in view of strong cultural barriers in relation to management and control among owners of local companies, many of which are either private or family owned.
"The fear to lose control has been one of the major stumbling blocks in the way of transforming private companies into public ones," he added.
He said the Commission would launch an educational and attitudinal change programme to convince such private entrepreneurs of the benefits of listing.
To this end, he said the possibility to enter into partnership with various business associations would be explored - Employers Association of Ghana, Association of Ghana Industries, Private Enterprise Foundation, Ghana National Chamber of Commerce and Industry, Association of Medium and Small scale Industries among others.
"In this direction, many road shows, workshops and other interactive programmes would soon be embarked upon to educate and urge the business community in the country to use the capital market as their preferred source for raising funds," he reiterated.
On the development of the Over-the-Counter (OTC) Securities Market, he remarked that preliminary investigations by SEC showed that there are many local and foreign public companies, which have issued shares on the OTC rather than on the exchange. These include very large firms, mostly financial institutions, and their number far exceeds those listed on the GSE.
However, he said their activities are not transparent in real time, as price discovery and their current value are either non-existent or not known compare to those on the official exchange.
The OTC market has for a long time remained un-regulated.
He said his outfit would soon embark on a programme to formalise the OTC market by coming out with a set of regulations to guide its development and efficient functioning.
This step is meant to provide reliable price discovery mechanism, investor protection and fund raising opportunities to local SMEs and other companies for growth.
"We at the Commission believe that since the industrial structure of the country is predominantly SMEs, many of which hardly meet the listing and disclosure requirements of the GSE and the SEC as well as the collateral requirements of the banks, the development and effective regulation of the OTC presents one of the most viable opportunities for access to capital and industrial growth of the country," he said.
