The Ghana Alternative Market (GAX), administered by the Ghana Stock Exchange, was launched in 2013 to accommodate companies at various stages of their development, including start-ups and existing enterprise both small and medium.
It operates as a parallel market to GSE’S official list and is specifically targeted at businesses with potential for growth with a number of incentives and benefits accruing from listing on the GAX.
In recent years, getting capital usually from banking institutions to finance business and projects doesn’t come easy, especially for SMEs and start-ups since they are inherently risky.
Even if accessed, interest rates are huge, around 30%, making cost of capital expensive.
Mr. Jon Benjamin, the British High Commissioner to Ghana, has noted that, it is time Ghanaian companies started looking elsewhere for capital aside of banks since that is not the only source to obtain finance.
Speaking at the launch of Capital SME, an initiative to help SMEs on accessing long term capital, Benjamin noted that with current interest rates at over 30%, finding a loan to finance business expansion doesn’t come cheap.
“But for the right business owner, banking finance isn’t the only way to raise capital” he added.
He further noted that “Capital Markets offer businesses access to long-term capital, along with brand recognition and visibility” even for the small scale business following the establishment of the Ghana Alternative Market (GAX) on the local bourse.
According to him, the capital market has a reasonable regulatory framework to play its role appropriately and called for a greater participation of local companies on the Ghana Stock Exchange (GSE) to raise long term capital for themselves, which will consequently help develop the country’s capital market.
“A cultural shift is needed to drive capital market development in Ghana and encourage companies to list. Capital market agents, who stand to be the beneficiaries of a developed capital market, should drive this work” he added
Mrs Magdalene Apenteng, director of the public investment division of the Ministry of Finance, weighed in that, since SMEs still remain the backbone of the national economy, constituting 90% of registered companies in the country, it is necessary for them to list on the GAX because it is a credible platform that offers an opportunity to not only access capital but also for visibility and sustainability.
Capital SME is an effort by some local and international working groups to explain to SMEs what the capital market is and how it can help grow their businesses by getting them listed on the Ghana alternative market
Currently, eight companies are listed on the Ghana Alternative Market.