A Managing Consultant of SEM Financial Company Limited, Mr Ato Barnes, has advised small and medium enterprises (SMEs) and entrepreneurs to move beyond their fears and look at raising funds from the Ghana Alternative Market (GAX) to finance and expand their businesses.
He said financing through listing on the GAX was not a new concept and, therefore, urged SMEs to move beyond the fear of sharing the ownership of their companies with the public and use the GAX as an alternative source of financing to grow their businesses.
“This requires a change of mindset on how we traditionally finance our businesses. We can learn some lessons from the story of “Who Moved My Cheese”, as old beliefs do not lead to new opportunities. The quicker you let go of your old beliefs, the sooner you find new opportunities,” he stated.
“When you move beyond your fear, you feel free. Changes happen so you need to anticipate it, monitor it and adapt to it quickly,” he added.
Mr Barnes said this when he delivered a presentation at a workshop which was organised by the USAID FinGAP and the Ghana Stock Exchange in Accra. The workshop was on the theme: ‘Leveraging the capital market to drive business growth for enhanced economic development.’
The workshop was attended by over 100 members of the Ghana National Chamber of Commerce and Industry (GNCCI), the Association of Ghana Industries (AGI), the Federation of Association of Ghanaian Exporters (FAGE), the Institute of Financial and Economic Journalist (IFEJ) and representatives from the Kosmos Energy Innovation Centre.
Advantages of listing on GAX
Sharing some of the advantages of listing on GAX, Mr Barnes said it helped to spread the risk of ownership among a large group of shareholders and also allowed original shareholders to cash in some of their profits as the company grows while still retaining a percentage it.
He also pointed out that the interest cost of listing debt securities were relatively lower, which allowed the company to raise additional funds through the issuance of more debt or shares.
“By listing on GAX, companies have additional leverage when obtaining loans from financial institutions and can also offer securities in the acquisition of other companies,” he explained.
“Having a security listed on an exchange also affords the company increased credibility with the public, having the company indirectly endorsed through having their securities traded on the exchange,” he added.
He also pointed out that having a company’s securities listed on an exchange could attract the attention of pension funds, mutual funds, unit trusts and other institutional funds.
A Consultant at GAX, Mr David Tetteh, taking the companies through the listing requirements, said the organisation should be a public limited liability company duly incorporated under the Companies Act, 1963 (Act 179).
He added that the company should also accept the continuous listing obligations applicable with its admission to the GAX and a stated capital of GH¢250,000 at the time of listing.
In the case of rural banks, he said the stated capital should be as required by the Bank of Ghana.
“The applicant company must have operated for a minimum of one year and published accounts in accordance with the Companies Code 1963, (Act 179) and shares to be listed must be transferrable and subsequent listing should also be transferrable,” he stated.
Investment is key
The Acting Chief of Party of USAID FinGAP, Dr Victor Antwi, said investment was key to economic growth and stability in the country.
He noted that the workshop was, therefore, aimed at facilitating sustainable investment and ensuring that businesses, especially agribusiness companies in the downstream of various value and supply chains, as well as capital market key players, were on the same page and understood one another’s needs.
“It was to ensure that the excellent business opportunities in Ghana are supported. This is to facilitate access to alternative and competitive sources of funds to finance these investment development opportunities,” he stated.
He said the country's entrepreneurs and businessmen were capable of producing goods and providing services for the country and beyond if they got the necessary investment.
“Ghana is endowed with huge human resource capital and other natural resources which need to be harnessed to achieve this goal,” he said.