Ekow Afedzie, Managing Director, Ghana Stock Exchange (GSE): Interview

Interview: Ekow Afedzie

What main objectives does the GSE want to achieve through its three-year strategic plan?

EKOW AFEDZIE: By 2023 we want to achieve three key things.

First, we want to be recognised as a demutualised entity that is innovative and competitive. Second, we aim to be the preferred platform in the provision of finance and investment for both the public and private sectors. Lastly, in the regional and global context, we want to be recognised as the preferred entry point market by regional and international players, and the preferred platform for financing and investment for retail and institutional investors. To achieve this, we want to increase equity listings on the market by 25% and bond issuances by 50% by 2023.

We also want to make sure that we become the go-to investment platform for both retail and institutional investors within Ghanaian capital markets. Part of these efforts will include enhancing the dissemination of our market information, widening financial sector literacy and strengthening compliance.

In what ways can capital markets facilitate broader economic development in Ghana?

AFEDZIE: We plan to facilitate the development and implementation of some of the initiatives of the regulators, particularly by collaborating with policymakers to find ways to enable small and medium-sized enterprises (SMEs) to use the market to raise capital. In addition, we aim to create our own incubation programme to train SMEs and build a pipeline to enable Ghanaian companies to raise capital from the market.

The GSE is also seeking to play a role in the One District, One Factory programme to provide opportunities for equity and bonds issuances for manufacturers. As we further develop the Ghana Fixed-Income Market (GFIM), infrastructure development bonds will increase and drive economic development.

There is also an important role for regulators to play to encourage the listing of multinationals in our local markets. For example, the National Communications Authority mandated MTN Ghana to undertake an initial public offering in order to secure its 4G licence. We hope to see regulators in other markets act similarly.

How can liquidity in the bond markets be improved?

AFEDZIE: Since August 2015 the GFIM has offered trading opportunities for all fixed-income instruments, including government bonds, corporate bonds and municipal bonds. Liquidity has been improving steadily since the inauguration of the GFIM: we witnessed around GHS5bn ($968.5m) worth of trading in 2015, which is about GHS1bn ($193.7m) in current value. Volume traded reached GHS27bn ($5.2bn) by 2016 and further increased to GHS37bn ($7.2bn) by 2018. In 2019 we exceeded that amount in December, with GHS55bn ($10.7bn) worth of bonds, almost 50% more than 2018. While this demonstrates substantial improvement in liquidity, we intend to further increase these levels. We also aim to raise the rates of bond issuance by corporate bodies. Many features will be introduced to encourage this, including the adoption of global master repurchasing agreement guidelines for trading. We will also introduce securities for lending and borrowing on the market in the near future, and will encourage more dealers to play the role of the market maker, thereby increasing liquidity for traders.

Furthermore, we want to ensure better education on investment in bonds and debt instruments. There is a lot of untapped demand, as most Ghanaian investors prefer to have debt security. While there has been considerable growth with regard to corporate bonds and government infrastructure bonds, municipal ones remain underdeveloped. Rules do allow for municipal bonds to be listed and issued, but we need to promote activity more aggressively, so to speak. In addition, research should be undertaken to allow for the elimination of legal or structural impediments to bond issuance by municipal authorities in the near future.