Contrary to the perception that the transaction cost for listing on the Ghana Stock Exchange (GSE) is too high, particularly for Small and Medium-scale Enterprises (SMEs), the Managing Director of the Ghana Stock Exchange, Ekow Afedzie, has suggested that cultural leanings surrounding ownership remains the primary reason for low participation of indigenous businesses on the market.

According to him, given the largely communal expressions witnessed in Ghanaian culture, there is a tendency for ownership to be kept among kinsfolk: a position that has adversely affected the local equities market.

“The issue lies largely with our culture, and we see this as most businesses are wholly family-owned or have just a few closely-knit and often related people coming together. While we might be communal in many aspects of our culture, when it comes to ownership we would rather own things individually – or at most keep it within the family. We need to sensitise people for them to come to a point where they appreciate value over volume,” he said as part of a panel during the maiden edition of the Money Summit organised by the B&FT.

Mr. Afedzie further suggested that the propensity for family ownership has had a negative bearing on many companies, as they have struggled to institute proper corporate governance structures as a result of the quasi-formal nature of their operations.

In addition, he stated that some businesses are averse to transparency under the guise of keeping operating information private; while others assume that the barest due diligence measures are too stringent relative to the potential economic gain from equity investor participation.

“There is a seeming lack in desire from many of our business owners to offer full disclosure; there is a sense in which they assume it is unnecessary prying from outsiders. This is also expressed in the frustrations many have with the due diligence requirements. But if we want to invest in our companies and earn returns, the companies must be attractive; and that is why we need these processes where professionals – accountants, lawyers, brokers – can offer guidance,” he explained.

Stating that the economy cannot attain full prosperity – especially in a post-pandemic world -solely on debt financing, the GSE Managing Director argued that a conscious effort must be made to promote investment in equities by all stakeholders: the state, regulators, market operators, business owners and investing public.

He expressed optimism that the efforts being made by his outfit, which are geared toward increasing sensitization of the equities market, will yield fruit – adding that patience must be exercised by all participants. “It will take time for us to develop the culture to a point where there is an appreciation for equities investing by businesses and the investing public alike.”

Mr. Afedzie was part of a panel discussing the role of investments for post-pandemic economic recovery. The other panellists were the Managing Director of Databank, Kojo Addae-Mensah; Chief Executive Officer (CEO) at Africa Sureties and Insurance Advisory, Solomon Lartey; as well as the CEO of GLICO Group, Edward Forkuo Kyei.