Stakeholders lament Ghana's dormant capital market

Financial experts have expressed concern over the prolonged inactivity on Ghana’s capital market since the major Initial Public Offering of MTN Ghana’s 2018 listing.

The stakeholders blamed this on investors over-reliance on government securities and regulatory delays.

The concerns were raised at a recent capital market forum held at the World Bank office in Accra where experts from the Ghana Securities Industry Association and the Securities and Exchange Commission (SEC) dissected the market’s challenges.

The event also featured a presentation on the role of capital market in lower middle-income countries.

The prolonged dormancy of Ghana’s capital market is starkly illustrated by its performance and activity metrics.

The market capitalisation as a percentage of GDP has consistently lagged behind its peers in sub-Saharan Africa, highlighting the market’s underdeveloped potential and failure to keep pace with economic growth.

This inactivity is further evidenced by a critical lack of new listings and product diversity.

The market has not seen a significant Initial Public Offering (IPO) since MTN Ghana’s in 2018, creating a six-year drought in primary equity listings.

Eugenia Basheer of the Ghana Securities Industry Association noted that the Ghana Stock Exchange had been largely flat for years, a direct reflection of broader economic conditions.

She said unsustainable macroeconomics killed investor confidence necessary for market growth.

Basheer noted that the capital market faced competition from government debt as market players were drawn to risk-free T-bills offering returns as high as 32 per cent, making them reluctant to invest in equities.

Basheer identified regulatory bottlenecks as a major hurdle.

She said gaps in the SEC’s board tenure had previously stalled the market for almost a year, delaying approvals and killing potential listings.

“And one of the key things for us is you cannot have a regulator whose board is made up of commissioners at a point, and because of the way the law is structured, the term of office comes to an end whenever there is a transition after an election,” she said.

“But there was a year during a transition in which we went for almost a year without a board for a regulator of our capital market. That is a killer for the capital market.”

In response, Dr James Klutse Avedzi, the Acting Director-General of the SEC, confirmed that a new Securities and Industry Bill would address that issue.

He estimated that the bill would be passed by mid-2026, signalling a positive step towards revitalising the dormant market.

Dr Avedzi said fortunately, the bill had made provision for the board to overlap in such a way that by the time there was a new government, the board in place could wait for its term end.

“So, there’s some transitional arrangement being made in the new bill to cure that challenge,” he said.