Dep. Governor Dr Maxwell Opoku-Afari calls for creation of ‘Market for Capital’
Chairman of the Governing Committee of the Ghana Fixed Income Market (GFIM) and Deputy Governor of the Bank of Ghana (BoG), Dr Maxwell Opoku-Afari, has called for the creation of a “market for capital” in the country.
His call for the creation of a market for capital follows the successful development and recent launch of the Commercial Paper Market by the Ghana Stock Exchange (GSE).
“Just as the Committee has successfully developed the Commercial Paper Market, I am throwing a new challenge to them and the challenge is to create a market for capital,” he quipped.
At the most basic level, the market for capital is a type of market where individuals and institutions lend and borrow capital.
Capital here refers to financial resources like money or other forms of assets used to generate wealth through investment.
Speaking at the launch, Dr Opoku-Afari noted that as part of strategic efforts to improve product offering and deepen Ghana’s capital market, the GFIM through a market-led process developed the Commercial Paper Issuance and Admission Rules.
The Rules, developed in line with international standards with the aim of meeting market needs, holds immense potential to grow the debt market and to provide flexible financing and investment platforms for businesses and investors alike.
“Through this platform, GFIM aims to contribute to national economic development through enhanced access to lower cost of capital, diversification of funding sources, and improved creditworthiness. This initiative represents a significant milestone in the evolution of our financial markets and the economy at large.
“Our next initiative is to develop the Securities Lending and Borrowing, and Market Making to add up to the stock of products on the market. These efforts signify our commitment to making Ghana the financial hub of the sub-region,” he posited.
The GSE on Friday, May 10, 2024, launched the much anticipated Commercial Paper Market aimed at providing short-term financing to businesses listed on the local bourse.
The Commercial Paper Market seeks to augment the depth and liquidity of Ghana’s securities landscape, ultimately propelling the nation’s economic development.
The new market offers an avenue for private pension funds, keen to explore investment diversification, and companies seeking alternative sources of short-term finance beyond conventional banking channels.
By bridging the gap between investors and companies in need of such financing, the Commercial Paper Market endeavors to usher in a new era of financial flexibility and risk reduction.
The Commercial Paper has a tenure of 270 days and can be issued at a discount to the face value or be issued at an interest rate.
The debt instrument, according to the GSE, can be rolled over partially or wholly.
Businesses eligible to issue a Commercial Paper Market on the GSE must be worth at least GHS 5 million and be able to issue a commercial paper not less than GHS 1 million.
The company will be required to provide pre-tax earnings of three (3) years, it must have no history of default or overdue loans.
The company must also have an investment grade rating issued by a rating agency accredited by the GSE.
The company must also seek two approvals, one from the Securities and Exchange Commission (SEC) and the other from the Ghana Fixed Income Market (GFIM).
