The Ghana Alternative Market (GAX) which is a special equity market for the listing of small and medium-sized enterprises (SMEs) has only five companies listed on it since its establishment in 2013 and as such experts have advised that there should be intensified education on stock markets to boost the confidence of such SMEs and startups in the market to list.
Samba Foods, Meridian Marshalls Holdings, Hords, Intravenous Infusions, as well as Digicut Production & Advertising are the five companies listed on the market.
In total, these five listed companies hold 594.72 million shares valued at GH¢48.99 million on the stock exchange.
This is quite worrying and some market watchers have described this outturn as disappointing against the high expectations when the GAX was created. Besides, the GAX targets SMEs and as such the listing requirements and rules are less demanding than the requirement for companies listed on the Ghana Stock Exchange (GSE}.
Additionally, unlike the GSE, where listed companies must have a minimum stated capital of GH¢1m, the GAX requires only GH¢250,000 and does not require that a company have a proven track record of profitability before listing.
Furthermore, listing and application fees are waived on the GAX. The GAX also announced a listing support fund in April 2018, which aims to provide companies with advisory services during the listing process.
“For some time now, the main exchange has not been active because there aren’t too many persons that have surplus to trade on the market, except the institutional investors. So if the stock market is suffering, naturally the alternative market would suffer,” William Mensah, an investment banker said.
“Government should target the alternative market possibly with the 1D1F companies. Those companies under its special initiative that are seen to be successful can be made to list on the GAX as part of the condition for support under the 1D1F initiative,” he added.
Prior to the start of the financial sector crisis in September 2017, the GSE disclosed that there were SMEs which were prepared for listing on the market but this was unfortunately stalled during the sector’s clean up.
However, the financial crises, was followed immediately by the coronavirus pandemic which has had great economic impact on businesses and livelihoods of individuals. As such most SME’s shy away from listing on the Market.
Although, there is a resurgence of the coronavirus pandemic which appears to be more delicate than before, experts hope that with the boost in investors’ confidence at the start of the New Year, the GAX is likely to be revamped; so entrepreneurs should be looking to it for their capital requirements in the medium term.
Experts, however, hold that to increase the number of listings on the market as well as to get more buying interest and trading to happen on the GAX, there is a need to deepen education on it.