The Securities and Exchange Commission (SEC) has unveiled a 10-year Capital Market Master Plan which would serve as a blueprint for developing the market to better support economic growth of the country, especially at a time the country seeks to recover from the pandemic.
The Master Plan envisions to raise GH¢15.2 billion in absolute amount in equity and GH¢52 billion in bonds at the end of the year 2029. The plan is further expected to position Ghana’s domestic market as the preferred choice for investors and issuers by improving diversity, increasing investor base, strengthening infrastructure and improving regulations, enforcement and market confidence.
The 10-year plan, which runs through to 2029, is anchored on four main pillars. With the first pillar, the plan seeks to create diversity of investment products and liquidity of securities market by prioritizing the manufacturing and agricultural value chain. The second pillar also seeks to increase the investor base by strengthening the institutions and the rule of law.
Then, the third pillar will also strengthen infrastructure and improve market services by prioritizing the adoption of technology to enhance business efficiency; and the fourth pillar seeks to improving regulation, enforcement and market confidence by enhancing public services delivery. Each pillar has its own strategies to help achieve the targets set in them.
Speaking at the unveiling of the Master Plan in Accra yesterday, Finance Minister Ken Ofori-Atta said the implementation of the plan will transform the country’s capital market and make it one of the best on the continent as it will provide access to cheaper source of finances for businesses.
“The initiatives under the Capital Market Master Plan have the advantage of allowing for strong development of the real estate sector, giving enormous funding access to real estate developers, and helping to reduce the housing and infrastructure deficit in the country. Through the strengthening of the private fund machinery, SMEs and new entrepreneurs will have access to funds to support their growth agenda and ultimately reduce the level of unemployment in the country.
Undeniably, these initiatives will position Ghana’s capital market as a ready access to cheaper finance option to businesses, boosting production and services and making businesses more productive. The ripple effect on the creation of more jobs, higher standards of living, increase in savings and investments and poverty reduction cannot be overemphasized,” he said.
Also commenting on the plan, Director-General of the Securities and Exchange Commission, Daniel Ogbarmey Tetteh said it will provide strategic direction and a clear roadmap towards fulfilling government’s vision of positioning Ghana as the regional hub for financial services.
“We believe this plan will complement government’s efforts in building a comprehensive ecosystem to make the country a preferred destination for a regionally-focused financial services hub. At the same time, we expect that the implementation of this plan will satisfy the financial needs of our growing economy while also creating investment opportunities for wealth creation.
State of the capital market
The country’s capital market is still small relative to other emerging markets. It is dominated by government domestic debt with total value outstanding at GH¢115 billion as at December 2019, representing 33 percent of GDP.
Total market capitalization has seen a poor performance in the recent past years, as it has witnessed a contraction of 32 percent in 2015 to -16 percent in 2019. In terms of values, total market capitalization has remained flat from GH¢57.1 billion in 2015 to GH¢56.8 billion in 2019. Domestic market capitalization has, however, seen a significant increase from GH¢11.2 billion to GH¢22.7 billion within the same period.