How Ghana's capital markets plan to attract new participants

The Ghanaian authorities have worked in recent years to increase the depth and breadth of the country’s capital markets, introducing fixed-income, commodity and small business-focused exchanges. The Covid-19 pandemic brought slower trading activity and lower market capitalisation as investors shifted from equities to comparatively lower-risk options such as government bonds. However, both picked up towards the close of 2020 as the economy moved into the recovery stage.

While the sector faces several challenges – including low equities trading, a lack of awareness among the public about the benefits of capital market investment and constrained innovation – the government is working on outreach and education initiatives, and introducing new products to bolster participation.


The Ghana Stock Exchange (GSE), the country’s principal exchange, was established in 1990 with 11 equity listings and a commemorative bond. Over the subsequent decades a series of reforms were implemented to facilitate the market’s growth, as well as support wider government efforts to diversify the economy. These included the introduction of a fully automated trading platform with clearing, settlement and depository functions in 2008, and the launch of the Ghana Fixed Income Market (GFIM) in 2015 – shifting the GSE from a marketplace in which banks and asset managers traded with each other to one that offered electronic trading of debt and equity. The GFIM is a platform for the purchase and sale of government securities, and corporate bonds and notes. These changes and others allowed for the diversification of offerings to include foreign-exchange swaps, exchange-traded funds (ETFs) and asset-backed securities; indeed, the GSE ranks among the top African capital markets in terms of product diversity.

There were 36 total companies listed on the main market and Ghana Alternative Market (GAX) as of late 2021. Institutional investors dominate the GSE, accounting for some 90% of the value of traded stocks. Between January and October 2021 foreign companies traded 72.3% of stocks on the GSE by value, while local companies and pension funds traded 15.5% and 5.2%, respectively. Individual investors traded the remainder: 6.5% by Ghanaians and 0.5% by foreigners.

In 2021 Ghana ranked fourth out of 23 countries on Absa’s Africa Financial Markets Index, created by the Official Monetary and Financial Institutions Forum, independent think tank, along with Barclays Africa. The country performed well in terms of the enforceability of standard financial market master agreements, ranking first; market transparency and the tax and regulatory environment, ranking fifth; and market depth, ranking sixth. This was a marked improvement from its 2019 ranking of 13th place and two positions higher than in 2020. Absa cited Ghana’s active foreign exchange market and strong legal framework for its performance in 2020 and 2021, but notes that pension assets per capita remain relatively low.


Market capitalisation fell by 4.3% in 2020, from GHS56.8bn ($9.7bn) in December 2019 to GHS54.4bn ($9.3bn) December 2020, but rebounded and grew to GHS64.3bn ($11bn) in October 2021. Domestic capitalisation accounted for nearly 45% of this last figure, or GHS28.7bn ($4.9bn). The mining sector accounted for 51% of the total that month, followed by ICT (23%) and the finance sector (20%).

The top-three firms account for approximately 75% of market capitalisation. In October 2021 Tullow Oil represented 27% of the total, followed by AngloGold Ashanti (24%) and MTN Ghana (23%).


The Securities and Exchange Commission (SEC) was established in 2016 to regulate and promote the development of an efficient, transparent and equitable securities market that protects both the interests of investors and the integrity of the exchange. It also has the mandate to regulate commodities and futures exchanges, security deposits, mutual funds, hedge funds, private equity and venture capital players, underwriters and investment advisors. The SEC has worked with GSE management to attract more companies to the exchange, as well as facilitate the creation of an open capital-raising platform.

Non-residents have been able to invest in the GSE since 2006 without limits or prior regulatory approval, and certain stock brokerages have been granted licences to serve foreign clients.

Master Plan

While Ghana’s capital markets ecosystem has grown in recent decades, the authorities are working to increase both its depth and breadth by attracting investment and new entrants, as well as by further diversifying offerings. Towards that end, in May 2021 the SEC launched the Capital Market Master Plan 2020-29 (CMMP), the government’s first long-term development programme for the sector. The CMMP features four pillars: improving the diversity of investment products and the liquidity of the securities market; widening the investor base; strengthening capital market infrastructure and improving service provision; and improving regulations, enforcement and market confidence. At the end of the period the plan aims to have turned Ghana into an established emerging capital market with a wide range of investment opportunities to facilitate the mobilisation of resources and support the country’s financial stability.

The CMMP is divided into three phases: 2020-22, 2023-25 and 2026-29. The measurement of key performance indicators is set for 2024 and 2029, including increasing the amount raised annually via equity from a baseline of GHS2bn ($342m) in 2018 to GHS6bn ($1bn) in 2024 and GBS15.2bn ($2.6bn) in 2029, and via bonds from GHS20.9bn ($3.6bn) to GHS40bn ($6.8bn) and GHS52bn ($8.9bn) over the same intervals. The plan also targets increasing market capitalisation as a share of GDP from 20.3% in 2018 to 50% in 2029.

The authorities hope that the programme will help capital markets become one of the main channels for financing innovation and entrepreneurship. This is especially important seeing as small-scale and start-up enterprises often have difficulties connecting to opportunities in the capital markets. “By strengthening the private fund machinery, small and medium-sized enterprises (SMEs) and new entrepreneurs will have access to funds to support their growth agenda and ultimately reduce the level of unemployment in the country,” Ken Ofori-Atta, the minister of finance, said at an event announcing the programme in May 2021.


The GSE publishes two indices: the GSE Composite Index and the GSE Financial Stocks Index. In recent years the performance of these indices has been volatile, with a modest contraction recorded each year between 2013 and 2016, followed by a 52.7% gain for the main index in 2017 on the back of overall economic expansion. Growth for the main index slowed in 2018 to 11.6%, before contracting by 13.3% and 14% in 2019 and 2020, respectively. The GSE Financial Stock Index also contracted these years, by 6.2% in 2019 and 11.7% in 2020. However, both indices recovered in 2021, and in October of that year the main index logged year-on-year (y-o-y) growth of 55.9% and the financial index rose by 48.6% y-o-y.

Over the course of 2020, 695.4m shares worth a combined GHS575.3m ($98.4m) were traded, down from 3.8bn shares worth GHS624.2m ($106.7m) in 2019. Average traded volume fell significantly over this period, from 15.4m trades per day to 2.8m trades per day. This was attributed to a shift in preferences, as many investors moved from equity to options deemed less risky, such as government bonds. Even so, the average daily traded value fell to a lesser degree, from GHS2.5m ($427,500) to GHS2.3m ($393,300).

Although stock market capitalisation reached GHS64.3bn ($11bn) in October 2021 – a 21% y-o-y increase – daily market averages remained subdued by wider economic pressures. The average volume and value of daily trades in the first 10 months of the year measured in at 2m and GSH2.1m ($359,100).


The GSE has seen a trend of both voluntary and compulsory delistings, the latter largely related to corporate governance and financial reporting violations. Between 2017 and 2021, eight companies delisted from the exchange, with the two most recent – Ghanaian vehicle and equipment manufacturer Mechanical Lloyd in April 2021 and UK consumer goods manufacturer PZ Cussons in October 2020 – being voluntary. Prior to Mechanical Lloyd and PZ Cussons, however, several companies were removed from the GSE after failing to meet listing standards. The first was UT Bank, which was delisted in December 2015 after its licence was revoked by the Bank of Ghana, the country’s central bank, for insolvency. This led to the GSE taking a more stringent stance on solvency and resulted in a series of involuntary delistings of companies deemed a threat to investors or the market. These included Transaction Solutions Ghana in April 2018; African Champion Industries in September 2018; and Pioneer Kitchenware in January 2019.

Planned Listings

While there were no initial public offerings (IPOs) in 2020, the GSE is working to attract more companies through a three-year plan launched in July 2021 to secure listings and shift the exchange from a “frontier” market classification to “emerging”. The plan focuses on diversifying instruments and the kind of companies listed on the exchange, as well as outreach efforts to raise awareness about how individuals can benefit from the stock exchange. It is part of the GSE’s broader effort to become the preferred platform for financing both the private and public sectors, as well as to provide tools that align with national development goals. “Ghana has an expanding economy and a growing population, so the underlying factors to attract investment are present in the coming years. The expectation is that larger amounts of capital will begin flowing back into Ghana from 2022,” Jerry Parkes, CEO of Injaro Investments, told OBG.

The authorities are also seeking to leverage the GSE to help companies recover from the economic effects of the Covid-19 pandemic. “As business activities bounce back in some sectors, retail and institutional investors should take advantage of the platform the exchange provides to invest their funds in equities and the fixed-income market,” Ekow Afedzie, managing director of the GSE, said in a statement in May 2021. “The exchange also provides an added-value platform for businesses to list as a public company to raise longterm capital through the issuance of equities and bonds.

The GSE is also working to bring state-owned enterprises (SOEs) to the exchange. In October 2021 the stock exchange announced plans to list 115 SOEs and raise a combined GHS2bn ($342m) – a move aimed at enhancing transparency in the companies’ operations while attracting domestic investment. Officials hope it will better position SOEs to contribute to the post-pandemic recovery by becoming more competitive and productive. They also aim to securitise SOEs’ revenue sources and enable them to raise capital directly, thereby reducing their financial burden on the government. However, it will be important for the SOEs to prove to investors that they are attractive options.

Alternative Market

The GAX was established in 2013 as a platform for start-ups and small and medium-sized enterprises (SMEs) to raise capital. The alternative market’s listing rules are less strict in order to attract smaller companies that may be deterred by the higher minimum capital and float requirements that large firms on the main index are held to. Moreover, companies on the GAX enjoy shortened procedures, lower costs and other incentives such as underwriting services and a dedicated support fund. The market gives smaller listed companies access to long-term capital at a competitive cost, reduces risk, and improves a firm’s liquidity and financial position. There are no listing or application fees, with GAX companies only paying an annual fee of GHS2000 ($342). Companies must have stated capital of at least GHS250,000 ($42,800) to list, while 25% of issued shares must be publicly floated to a minimum of 20 shareholders.

While the authorities initially aimed to have 50 firms listed by 2020, that year the GAX featured five businesses – food processing companies Samba Foods and Hords, production and advertising firm Digicut, education provider Meridian-Marshalls Holdings and pharmaceuticals firm Intravenous Infusions – for market capitalisation of GHS49.9m ($8.5m). The GAX welcomed another company, business incubator Pesewa One, in March 2021, which helped to raise market capitalisation to GHS52.2m ($8.9m) as of October 2021.


The GFIM is the GSE’s specialised platform for debt securities. According to the GFIM’s August 2021 status report, the government offers benchmark and non-benchmark securities; Treasury notes and bills; three-year US dollar bonds; and eurobonds, while eight companies offer securities. The platform’s traded volume rose significantly in recent years, from 5.2bn trades in 2015 to 108.4bn in 2020. This trend is expected to continue in the coming years, seeing as traded volume reached 155bn in the first nine months of 2021 alone.

The market is dominated by government debt, with the total value of outstanding government securities logging in at GHS148.5bn ($25.4bn) in September 2021, up from GHS120.7bn ($20.6bn) in December 2020 and GHS79.1bn ($13.5bn) in December 2019. Meanwhile, outstanding corporate securities were valued at GHS35.2bn ($6bn) in September 2021, up considerably from GHS11bn ($1.9bn) at the close of 2020 and GHS7.2bn ($1.2bn) in December 2019. Since the creation of the GFIM through to September 2021, 84 corporate bonds have been listed that raised a total of GHS12.1bn ($2.1bn). There were 190 listed debt instruments as of mid-2021, according to the SEC.

There are several key players active in the local bond market, augmenting activity from individual traders. The Social Security and National Insurance Trust is one such actor, with GHS9.3bn ($1.6bn) assets under management (AUM) as of April 2021. Pension funds, fund managers and private pension managers also held significant AUM, at GHS22.2bn ($3.8bn), GHS16.7bn ($2.9bn) and GHS12.9bn ($2.2bn), respectively. This highlights the expanding role of the financial management industry, which had GHS34bn ($5.8bn) in AUM as of June 2021, a 9% increase from the previous quarter.

Commodities Market

The GSE launched the Ghana Commodities Exchange (GCX) in November 2018 to link buyers and sellers to help secure competitive prices for products and improve market quality. It aims to connect smallholder farmers with local and regional agricultural and financial markets. The platform began trading in maize and has expanded its listed commodities to include rice, sesame, sorghum and soya beans. In July 2021 GCX officials announced plans to include cash crops and vegetables. The market currently offers spot contracts but is expected to expand its remit to include futures and options contracts.

The GCX established a network of 10 commodity warehouses across the country and supports value addition through storage, drying and repackaging. The warehouses also act as collateral, helping small-scale farmers – who traditionally have difficulties obtaining credit – access financing. Receipts from GCX facilities can be taken to banks to serve as collateral for a loan. As of July 2021 over 250 farmers had accessed loans to help finance their operations through this measure.

Between its creation in 2018 and July 2021, the GCX provided market access to around 320,000 small-scale farmers. Moreover, as part of its efforts to facilitate the regional trade of commodities, in September 2021 it signed a memorandum of understanding with Geneva-based agricultural commodities data firm AgFlow to launch the Ghana Commodity Information Systems project. When completed by early 2022, Ghanaian farmers will be able to compare domestic prices of commodities with those in markets such as Côte d’Ivoire, Togo, Sierra Leone and Burkina Faso, as well as import volume summaries for these markets.

Green & Social Options

The creation of alternative and commodities exchanges have helped Ghana diversify investment options, and the development of green financing options would be another step towards this end while aligning capital markets with environmental, social and governance (ESG) criteria. This segment is in the early stages in Ghana (see analysis). In 2020 the government held capacity-building seminars and workshops on the matter, but as of late 2021 there had yet to be green issuances in the domestic market. As of October 2020, Kenya, Namibia, Seychelles, Nigeria, Morocco and South Africa were the only African countries to issue green bonds, bringing in a total of $2.1bn through 17 issuances starting in April 2014, according to a 2021 report by FSD Africa.

A mature green financing segment could make Ghana more competitive. Offers are often held to higher transparency standards than traditional offerings and can help balance climate-related risk in investors’ portfolios. The latter is especially important as West Africa has been particularly affected by climate change. Indeed, the region has seen a growing number of extreme weather patterns such as flooding and prolonged droughts in recent years, pressuring crop yields and production, and ultimately impacting food security.

There are several barriers constraining green debt options in Ghana, including a relatively small market with little demand for non-sovereign issuances; a lack of understanding about green bonds; the absence of guidelines for green bond issuance; the slow identification of eligible projects; and the fact that ratings are not required to issue a green bond in Ghana. However, there have been moves in recent months to address these constraints. FSD Africa has identified several projects eligible for green bonds pertaining to waste collection and disposal; sustainable cocoa and coffee production; renewable energy; and water treatment. More specifically, the think tank identified 12 projects that could offer the green bond market a total of $7.4bn. Government outreach to the private sector, enhanced institutional capacity and awareness-raising could help drive investors’ demand in line with ESG standards.

Moreover, the authorities are working to establish issuance guidelines for green, social and sustainable bonds, a move that should give investors confidence in such options and provide them a dedicated space on the exchange. In May 2021 the International Finance Corporation announced that it would partner with the SEC to develop green bond guidelines for issuers and investors. As of late 2021 the programme was still in the developmental stage, but the authorities expect Ghana’s first green bond issuance in mid-2022.

In July 2021 Ghana announced that it was considering issuing a $2bn social bond – the first such offering in Africa. The proceeds of the offer would finance social initiatives such as a free secondary school programme that was implemented in 2017, as well as refinance existing debt for projects related to the environment and social development. While the issuance did not come to fruition in the second half of 2021, issuing social bonds has become increasingly popular with governments around the world since the start of the Covid-19 pandemic, with Chile, Ecuador and the EU using them to fund programmes related to job recovery, among other things. Once social and green bonds do hit the market in Ghana, it will be important for the authorities to clearly make the case for these alternative investment tools, seeing as many Ghanaian investors tend to favour low-risk government bonds.


In March 2021 the government offered a $3bn eurobond that was two times oversubscribed and included seven-year, 12-year and 20-year bonds at interest rates of 7.750%, 8.625% and 8.875%, respectively, as well as four-year, zero-coupon bonds – the last of these instruments being a first for an emerging market sovereign. The zero-coupon bonds do not pay interest, but are sold at a discount of their value at maturity. The government said $400m from the interest-free bonds will be used to refinance more expensive domestic debt, which has an average interest rate of 19%. This is expected to save the government around $200m over the four years. The proceeds of the offering will also help the government implement liability-management activities and fund growth-oriented expenditures. Investors from the US, Europe, Middle East and Asia participated in the offering. “The historic bond issuance is a strong signal that investors have confidence in our plan for debt sustainability, economic recovery and growth,” Ofori-Atta said in a statement at the time of the offering. The government also raised $2bn in 2018, $3bn in 2019 and $3bn in 2020 from international debt markets.


Although trading activity was suppressed in 2020, it experienced a healthy rebound in 2021. “The market is on an upwards trend,” Frank Donkor, manager of policy and research at the SEC, told OBG. “These higher levels of trading activity will improve investor confidence, which will in turn support equity prices.” Moreover, in September 2021 the National Pensions Regulatory Authority published guidelines for pensions – a segment with significant AUM – to invest in the stock exchange, with an aim to set a minimum investment in equities. While pension funds typically favour debt instruments and currently invest only a small portion of their portfolios in equities – at around 5%, according to Stanbic Bank – the new guidelines are expected expand pension funds’ participation in the equities market and provide a boost to liquidity.

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The Report: Ghana 2022

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