Gov’t stifles capital markets

…denies SEC a Board

Ghana’s capital markets have been shortchanged, to say the least, with the most important supervisory body, the Securities and Exchange Commission having to operate six months into the year without its highest decision making authority in place.

This situation is said to be making it difficult for the commission to operate effectively as the powers of the commission is vested in the members of the board.

Sources within the regulatory body confided in the Financial Intelligence (FI) that it has been frustrating as a number of important decisions critical to the workings of the capital markets cannot be taken for the absence of the board. With interest rates souring as a result of the global economic downturn, several investment houses had desired to come out with market instruments that meet the needs of investors, but they have had to wait. Corporate entities that wanted to raise funds from relatively cheaper sources via the capital markets have also had to wait in vain. Most regrettably, a source within SEC told the FI, pressure is being mounted on the commission to allow listed banks to proceed with planned rights issues to enable them meet the Bank of Ghana’s new capital requirement before the December 31, 2009 deadline. As it stands now, all such offers would have to be re-scheduled for the same time period, and current market conditions put the success of such offers in serious doubt. The commission, insiders explain, have also not been able to issue new licenses to market participants within the period, imposing serious hardships on the operations of certain investment houses.

“The Secretariat has been working, and the Director General has been up to task, but it is the board that is mandated to ensure that all disclosures are fully made before any market participant can be authorized to engage in any capital market transaction”, one of the sources told the FI.

Meanwhile, FI’s checks at the Presidency and at the Ministry of Finance and Economic Planning (MOFEP) whose consent is sought before the appointment, gave no hint as to the reason for the delay. The FI team is still making follow-ups on the legal section of MOFEP to establish where issues about nominations to the SEC board have gotten to.