The Ghana Stock Exchange (GSE) says its alternative market for small-and medium-scale enterprises that may not meet the requirements for listing on the main bourse will be operational next month.

According to the GSE, the Ghana Alternative Exchange (GAX) will focus on SMEs with high growth potential that desire to raise additional capital through the stock exchange. GSE Deputy Managing Director Ekow Afedzie told the B&FT the bourse has resolved all outstanding issues that prevented GAX’s full enrolment in 2012.

“What delayed the launch of GAX was the absence of a governing committee; now the team has been formed. After their first meeting, we will go all out to start promoting GAX. We don’t have any stumbling block now; we are ready to go.”

The five-member autonomous GAX governing committee will oversee operations of the alternative market. The GAX will accommodate companies at various stages of development, including start-ups and existing enterprises -- both small and medium. Mr. Afedzie said the main aim of GAX is to assist domestic companies to access markets and raise long-term capital.

Access to affordable capital is one of the most critical challenges of the SME sector, and bank credit often tends to be expensive -- if available at all.

Companies considering listing on the alternative market must have minimum capital of GH¢250,000 (US$146,600), lower than the GH¢1million required for the main market, he said. They must also have a minimum of 20 shareholders, compared with 100 for the main bourse.

He added that the alternative market not only affords SMEs a way of raising capital, but also offers incentives that will enable them to build a solid business. “We have looked at various requirements and procedures of the main market and introduced incentives. The incentives include mandatory underwriting for the offers, so that whoever is sponsoring a company will be required to take up to 20 percent of the offer.”

Companies listed on the GAX will also be able to access the SME Listing Support Fund -- which will be used to assist companies meet their listing expenses.

The fund has been set up with an initial GH¢1million contribution from the African Development Bank, Ghana Stock Exchange and the Venture Capital Trust Fund. The GSE said that it is putting measures in place to tackle GAX’s main challenge, which is getting SMEs -- which are typically averse to giving up part-ownership of their business -- to list on the market.