A senior Lecturer at the University of Ghana Business School (UGBS) has bemoaned that the Ghana Stock Exchange (GSE) does not have an impact on the country’s economic growth due to the small size of the market.
According to Dr Lord Mensah, the situation is as a result of only a few institutions trading on exchange while individuals barely purchase shares on the market.
“As it stands now we are not seeing the impact of the Ghanaian stock exchange on our economic growth because of the size of the market in relation to the GDP and economy in general.”
“You could see clearly that our market, for instance, the institution that does most of the trading on exchange, individuals barely purchases shares on the market.” He noted in an interview with GhanaWeb.
The Economist made the assertions following a statement by the Managing Director of the GSE, Ekow Afedzie who said the integration of the stock markets in West Africa was on course.
“So, we are in the second phase where we have the West African Regulators Association approving the documents and the rules. Now we are seeking ECOWAS recognition for what is being done so that it can bind all of us together. That is the stage we are now. Then we can move to the implementation stage this year,” he said.
According to the GSE boss, the move will allow qualified West African brokers access to the listed securities and market information in the region. This, he added, will permit them to execute transactions, while issuers will be able to raise capital across the region too.
“So, if you are a broker in Nigeria and you meet the requirements and you are given the recognition you can trade across,” Mr Afedzie added.
Dr Mensah indicated the cross-border listing will be a solution as relying on the internal market alone especially the GSE will not yield much compared to a neighbouring country such as Nigeria which has one of the largest markets in the sub-region.
“…The integration will provide liquidity in the sense that if you rely on your internal market alone, sometimes the awareness might not be good for individuals to purchase on it.
Lauding the initiative being developed by the West African Capital Markets Integration Council (WACMIC), he said the West African Stock Exchange integration is an advantage for the Ghana Stock Exchange as the move will further open the local market for more shares and investors.
He further indicated that the merger will help individuals and indigenous companies who put their companies on the market enjoy the benefits of economies of scale which will, in the long run, promote an upscale in the economy.
“If we are integrating and able to attract investors from elsewhere…, it comes with liquidity, it comes with competition because the market will be open for shares which will go a long way to benefit our economic growth.”