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Business News of Wednesday, 17 August 2016

Source: B&FT

GAX targets to list more SMEs

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With the ongoing countrywide dialogue with Small and Medium Enterprises (SMEs) over the need to seek more accessible and affordable alternative sources of funding, it is hoped that more SMEs will be attracted to list on the Ghana Alternative Market (GAX), set-aside by the Ghana Stock Exchange.

For over a year and some months after the introduction of GAX, which is modeled to help assist local businesses to raise long-term capital, not too many domestic businesses have listed on the market.

However, given the global economic challenges which has ballooned lending rates and other interest charges on loans amidst other hurdles businesses encounter in securing capital, the need to look to other sources of financing, like what provided by GAX, has become a major consideration.

The Ghana Alternative Market is an innovative market operated by the Ghana Stock Exchange, with a focus on businesses with high potential for growth.

It accommodates companies at the various stages of their development, including start-ups and existing enterprises, both small and medium.’

Among the huge benefits that awaits businesses which are listed on GAX, like the accessibility to long term capital at relatively lower cost, other incentive packages have also been put in place to complement these benefits.

For instance, there is the GAX-SME listing support fund, which is placed to support the cost of raising capital and differed of up-front fees. Companies listing on GAX can apply for funds under the GAX-SME listing support fund to pay fully or partly for the cost of advisory services.

This is being done with the support and partnership of the Venture Capital Trust Fund and the African Development Bank.

The Deputy Managing Director of the Ghana Stock Exchange (GSE), Mr. Ekow Afedzie, said GAX was established as a parallel market to the main market, GSE, and therefore not an inferior market.

He explained that given the difficulties many local businesses face to get on the main market this alternative market was setup, by the GSE, with far less stringent requirements, processes and cost to enable domestic businesses to get listed.

He said at the moment there are four companies currently listed on GAX, with a fifth company soon to be included, and have so far raised GH?14 million while four others have also accumulated GH?200 million, floating bonds.

Mr. Afedzie, who said these in an interview, at a backdrop of a forum with some SMEs themed “Raising capital through the Ghana Alternative Market,” observed that many companies have hitherto not taken to be listed on GAX because it requires these businesses to make all the necessary preparation before getting onboard.

However, he was confident that the ongoing meetings with SMEs facilitated in partnership with ENGINE, African Development Bank and TECHNOSERVE and the others will yield a positive response from local businesses.

The GAX is considered as the best platform for SMEs to raise long term capital.

Although the current environment does not appear to be favorable for investment in shares by some people, it is hoped that when the local economy picks up more companies will clamor to be on the market.

At least about ten more local businesses, with high potential for growth, are targeted to be listed on GAX by 2017.

Some beneficiary businesses of the ENGINE and TECHNOSERVE programmes who participated at the forum also expressed their desire and hope to soon list on GAX.