How the Ghana Stock Exchange (GSE) can be improved

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Governments in Africa have eulogized free markets and the role of the private sector in economic growth and development. The private sector requires an enabling environment to thrive and flourish, thus the need for a vibrant capital market to improve the private sector‟s access to capital. In lieu of this, the Ghana Stock Exchange (GSE) has enabled businesses in Ghana and the government to raise long-term capital and helped investors to obtain liquidity, fair capital safety and diversity of investments. It has also been one of the best performing stock exchanges in the world. That notwithstanding, there are numerous challenges hampering the development of the GSE. Therefore, this study explores how to improve the GSE by identifying the challenges impeding the development of the GSE and finding ways to deal with such challenges. The method used was to survey investors on the GSE and also interview the key players in the industry. It was found that the GSE is generally illiquid and not efficient. The number of listed securities on the Exchange is woefully inadequate. Also, most of the listed companies have very limited float of shares available for trading and their financial performance has been abysmal over the years. The cost of listing is generally very expensive and most of the brokerage firms are concentrated in Accra. Analyzing the results, massive education, incentives for listing, government use of the GSE for divestiture and bond issue for infrastructure are discussed as possible solutions.
Thesis submitted to the Department of Business Administration, Ashesi University College, in partial fulfillment of Bachelor of Science degree in Business Administration, April 2010
Ghana, Ghana Stock Exchange, stock exchange