The Ghana Stock Exchange (GSE) authorities have disclosed that the Ghana Alternative Market (GAX), the Special Share Market for Small and Medium Enterprises (SMEs), will be revived as part of their short-term plans.
Just five firms have been listed on the GAX since its creation in 2013, which targets SMEs by carrying out less demanding listing criteria and guidelines than the GSE.
Most market analysts have described this outcome as disappointing as the GAX was produced against high expectations.
Nevertheless, in an interview with Business24, GSE Strategic Strategist David Tetteh announced plans to revamp the industry.
“The GAX will be revamped this year, so entrepreneurs should be looking to it for their capital requirements in the medium term. This is something that is going to happen this year, by the fourth quarter.”
He further clarified: “The renovation will involve increasing the number of listings on the market and increasing the interest in buying and making more trading happen on the GAX.”
Samba Foods, Meridian Marshalls Holdings, Hords, Intravenous Infusions, and Digicut Development & Advertising are the five companies listed on the market. A total of 594.72 million shares valued at GH48.99 million are owned by the firms.
Prior to the beginning of the financial sector crisis in September 2017, the GSE had suggested that around 20 SMEs were being planned for market listing.
The Technical Analyst, however, indicated that during the financial crisis, which was followed by the coronavirus pandemic, the process slowed.
For some time now, the largest exchange has not been involved and, with the exception of institutional investors, there are not so many individuals with a surplus to sell on the market. So the alternative market will naturally struggle if the stock market is struggling,’ said William Mensah, an investment banker.
‘The government could theoretically target the alternative market of 1D1F firms. Those enterprises that are seen to be effective under its special initiative will be classified on the GAX as part of the 1D1F initiative’s help requirement.
He stressed that the alternative market will fail to achieve its goals unless such an integrated strategy aimed at the 1D1F companies was established.
Some experts have also called for intensified GAX education to raise the confidence of SME owners and business start-ups.
Unlike the GSE, where listed businesses must have a GH-1m minimum declared capital, the GAX needs only GH-250,000 and does not require a business to have a demonstrated profitability record before listing.
Furthermore, on the GAX, listing and submission costs are waived, while businesses listed on the GSE incur an annual GH 2,000 tax. In April 2018, GAX also launched a listing support fund, which aims to offer advisory services to companies during the listing period.