SEC - Capital Market Master Plan

Ghana Capital Market Master Plan
FOREWORD 3
INTRODUCTORY REMARKS - SEC 5
INTRODUCTORY REMARKS - CMWG
CONTENT
7
EXECUTIVE SUMMARY 8
INTRODUCTION 16
OVERVIEW OF GHANA’S CAPITAL MARKET 20
MACROECONOMIC AND POLICY ENVIRONMENT 21
MONEY MARKET AND GOVERNMENT DEBT 23
CAPITAL MARKET INSTRUMENTS – SUPPLY 24
CAPITAL MARKET INSTRUMENTS - DEMAND 31
CAPITAL MARKET INSTRUMENTS - INFRASTRUCTURE 36
REGULATORY FRAMEWORKS AND CHALLENGES 37
DEVELOPING THE CAPITAL MARKET MASTER PLAN 45

VISION FOR THE CAPITAL MARKET 45
KEY STRATEGIC PILLARS 46
DELIVERING GROWTH 47
ADDRESSING FINANCIAL TECHNOLOGY COMPANIES
(FINTECH ) 48
STRATEGIC INITIATIVES 49
IMPLEMENTATION FRAMEWORK 62
GOVERNANCE OF THE DEVELOPMENT PLAN 62
CHAMPION 62
STEERING COMMITTEE 62
INDUSTRY REVIEW COMMITTEE 63
WORKING GROUPS 64
SECRETARIAT 64
SEQUENCING OF THE INITIATIVES 65
MONITORING THE DELIVERY OF THE PROJECT 68
COSTS OF IMPLEMENTATION 70
GLOSSARY OF TERMS 75
Securities & Exchange Commission 2

T
he Capital Market is an
01. Foreword
essential driver for economic

growth and development.
Unfortunately, the evolution of our
financial sector has not aggressively
placed this essential industry at the
heart of financial sector development
over the decades.
Essentially, the Capital Market has

been developing over the years
without a dedicated comprehensive
coordinated plan and with
limited efforts on the part of key
stakeholders to enable sustainable
growth in the industry. Notably, the
implementation of broader financial
sector reforms spanning from the
establishment of the Ghana Stock
Exchange (GSE) in 1990 have not
brought to light Government’s
ultimate objective of creating a
viable ecosystem for long-term
capital to fuel Ghana’s development.
In consequence of these and of the
economic factors underlying them,
the Capital Market has not been
able to provide relatively cheaper, medium initiatives to celebrate in our history, but more
to long-term finance to the private sector rapid progress is needed.
thereby muting its impact on growth and
unemployment. To grow the industry on a sustainable basis, the
The progress made since the establishment Government of Ghana through the Ministry of
of the GSE, of which capitalisation is Finance (MoF) and the Securities and Exchange
currently about GH¢53 billion and the Commission (SEC) have developed a 10-year
recent establishment of the Ghana Capital Market Master Plan (CMMP) to shape
Commodities Exchange (GCX) are key the future of the industry.
To grow the industry on a sustainable basis, the

Government of Ghana through the Ministry of Finance
(MoF) and the Securities and Exchange Commission
(SEC) have developed a 10-year Capital Market Master
Plan (CMMP) to shape the future of the industry.
3 Securities & Exchange Commission

It is my hope that this Plan will achieve In this regard, this plan which is the first
its intended purpose of providing “a deep, dedicated strategy to develop the capital market
efficient, diversified and well-regulated capital is therefore critical to help Government position
market with a full range of products attractive the securities industry more firmly as a pillar for
to domestic and international investors”. economic growth and development towards
To position our achieving the
financial market on It is my hope that, this Plan will “Ghana Beyond
Aid” agenda.
a competitive edge, achieve its intended purpose
I urge all to support
the implementation
of providing “a deep, efficient, Our appreciation
of the policy diversified and well-regulated goes to the
UK’s Foreign,
recommendations capital market with a full range of Commonwealth
contained in the
Capital Market products attractive to domestic and and Development
Master Plan (CMMP) international investors. Office (FCDO)
to achieve the vision which financed
for the industry and the financial sector as a the development of the Plan, Ghana Securities
whole. I hope this strategy will fully integrate Industry Association (GSIA), Capital Market
our domestic market with the global financial Working Group established by the MoF and
system and leverage on the opportunities that the SEC, and the World Bank for their immense
the International Financial Services Centre contribution during the development of the
(IFSC) would represent. CMMP.
Hon. Ken Ofori - Atta

Minister for Finance Republic of Ghana

02. Introductory
T
Remarks - SEC
he Capital Market Master
Plan forms part of Ghana’s
efforts at building a robust and
sustainable long-term financial market
to anchor the country’s accelerated
development goals of its real sector of
the economy. It is aimed at charting
the course and providing the blueprint
to guide the development and growth
trajectory of the capital market over a
ten-year uninterrupted period. The four
strategic pillars or goals underscoring
the plan are as follows:
I) Improving diversity of investment

products and liquidity of securities
market. This involves building market
understanding, and confidence to
encourage active participation of
issuers of securities, investors and
other stakeholders in the market. The
overarching objective under this pillar
is to improve market liquidity, the
lack of which has bedeviled our market since its
inception.
II) Increasing the investor base. Increasing the

investor base is to achieve deeper penetration of
capital market products to ensure regular flow of
capital to issuers of securities and the business
community.
III) Strengthening infrastructure and improving
market services. This pillar is to strengthen
market infrastructure to improve market integrity
and to make securities on the Ghanaian market
easily accessible to investors at home and abroad.
IV) Improving regulation, enforcement and
market confidence. The last pillar is to improve
and strengthen regulation and enforcement.
The
Improving diversity Strengthening Improving

Increasing the
Strategic Pillars Underscoring
of products and infrastructure and regulation,
liquidity of securities investor base. improving market enforcement and
the Capital Market Master Plan

market. services. market confidence.

Undoubtedly, the Ghanaian Capital Market in building a comprehensive ecosystem to

has witnessed significant progress over the make the country a preferred destination for
past three decades, particularly, with respect a regionally-focused financial services hub
to the fundraising capacity it has provided as indicated in the 2019 National Budget
for the Ghanaian economy and economic Statement and Economic Policy. At the same
agents including the private sector and time, we expect that the implementation of
Government of Ghana; improving macro- this plan will put paid the financing needs
economic fundamentals; some of the notable of our growing economy while also creating
achievements during this period include investment opportunities for wealth
improvement in market infrastructure such creation.
as automation of trading and settlement The Capital Market Master Plan is a
platforms, dematerialization of collective effort of various
securities and establishment
of a Central Securities
The framework of stakeholders initiated by
Securities and Exchange
Depository; development this plan is designed Commission, Ghana,
of benchmarked legal to provide strategic through a process of
and regulatory framework extensive and iterative
and market practices; direction and a consultations involving
and modest expansion in clear roadmap a wide range of parties,
capital market products and particularly Ministry of
services including Collective
towards fulfilling Finance, other regulators
Investment Schemes, a government’s vision in the financial sector,
Commodities Exchange and
Warehouse Receipts system.
of positioning the Ghana Securities Industry
Association, not forgetting the
Furthermore, the presence Ghana as the independent consultants, local and
of a pool of well–educated regional hub for foreign experts and development
and talented capital market
professionals as well as strong
financial services. partners who played active roles in
the development of this document.
institutions can easily translate into better and It is the collective input of all these stakeholders,
brighter prospects for transitioning our Capital together with the Commission’s own internal
Market from a frontier market into an emerging work and research that formed the basis for
one. the development of the Capital Market Master
Plan. We would also like to appreciate the UK’s
In this era of increasing globalization and Foreign, Commonwealth and Development Office
international competitiveness, Ghana is touted as (FCDO) and the World Bank for providing the
one of the fastest growing economies in the world. funding for this project. It is our fervent hope
This presents great opportunities and threats that all stakeholders who have been a part of this
that require speedy exploitation of the country’s journey - public agencies and private economic
resources with a balanced and robust financial actors, regulators and market operators - would
system, particularly a long-term financial market all act in concert and with resolute passion in
to finance industry, agriculture, the housing its implementation to ensure that we realize the
and mortgage sector and sustainable physical objectives and expected outcomes of this plan.
infrastructure to become more competitive within
the global economy. As we roll up our sleeves to do our best in
implementing this Capital Market Master Plan, we
The framework of this plan is designed to provide will trust God to add His blessings.
strategic direction and a clear roadmap towards
fulfilling government’s vision of positioning Ghana
as the regional hub for financial services. We believe Rev. Daniel Ogbarmey Tetteh
that this plan will complement government’s efforts
Director-General
Securities & Exchange Commission, Ghana
Remarks - CMWG
03. Introductory
I
t has been a privilege to lead the as central to mobilizing savings and enhancing
development of the first 10-year Capital investments to support economic development
Market Master Plan for the Securities and compliment other financial initiatives
and Exchange Commission (SEC) and the such as mortgage financing, developing a
general market. The plan is timely, following robust domestic rating agency and positioning
the recent financial sector clean-up with Ghana as an International Financial Services
Center in the region.
expected increase in
financial activity and a I want to extend my
rebound in the coming sincere gratitude to
years. the World Bank team,
Mr. Carlos Leonardo
The design process Vicente, Ms. Swee
set us on a course Ee Ang, Ms. Barbara
of comprehensively Wiafe, the Director,
analyzing and Financial Sector
reviewing existing Division, Ministry of
trends and projections Finance Mr. Sampson
in the domestic, Akligoh, Director-
regional and General of SEC, Rev
Daniel Ogbarmey
international capital market, an Tetteh, and Deputy
evidence-based and policy-driven Director- General,
approach to effective execution
of the plan. We are confident this will strengthen Finance, of SEC, Mr. Paul Ababio for their
our credibility in the global capital market space. guidance and support, our internal and external
stakeholders who have contributed immensely to
The plan is expected to position Ghana’s the development of this plan, the Financial Sector
domestic market as the preferred choice for Division team led by Ms. Marian Mensah and the
investors and issuers by improving diversity of outstanding team of consultants Mr. Ato Barnes,
investment products and liquidity, increasing Mr. Phillip Delali Zumanu and Matthew Sullivan
investor base, strengthening infrastructure, and for spearheading the development of the plan.
improving regulations, enforcement and market
confidence. It will leverage global practice and
align infrastructure to support market efficiency Richard A Obuobi
while concurrently facilitating the deployment of
Financial Technology by the industry. Chairman
Capital Market Development Working Group
The government has identified the capital market
The plan is expected to position Ghana’s domestic market

as the preferred choice for investors and issuers by
improving diversity of investment products and liquidity,
increasing investor base, strengthening infrastructure,
and improving regulations, enforcement and market
confidence.
05. Executive Summary
T
his Capital Market Master Plan At the end of the plan period, it is anticipated that
sets out a proposed path for the the capital market in Ghana will be demonstrably
development of Ghana’s capital successful and well-functioning:
market over the next ten years (2020–
The market will be firmly established as
2029). This is not the first attempt at long-
an emerging market, with a commitment
1
term planning in this area. Indeed, this Plan joins of all participants to further improve
with and supports prior efforts, by both the private and promote the implementation of
sector and the government. It however represents international standards of regulation and
the first long-term plan dedicated to the capital of infrastructure;
market.
The Plan is built around a vision discussed and It will offer a wide range of investment
opportunities, including different sectors
2
agreed with key stakeholders in the market.
and different types of instruments;
key financial instruments will be
liquid; prices will be well-formed and
transparent;
It will facilitate mobilization of

The Plan is built resources towards promising business
3
opportunities, thereby creating jobs,
around a vision boosting economic growth, and
supporting the financial stability
discussed and of the country;
agreed with key

4
It will be one of the main channels
stakeholders in the for financing innovation and
entrepreneurship in the country; and
market.
It will be one of the main options for
5
domestic investors to channel their
savings while attracting significant
inflows of regional and overseas
investment funds.

NEED FOR CAPITAL MARKET DEVELOPMENT
The need for a plan to develop

HOW GHANA’S CAPITAL MARKET WILL LOOK the capital market in Ghana
AT THE END OF THE PLAN PERIOD is rooted in three main public
policy objectives.
1. Firstly, to fund Ghana’s

development priorities,
Government requires
efficient public borrowing
through a deep capital
market and robust
growth in the private
sector. These factors
also underpin economic
growth. Numerous studies
conducted on developed
It will facilitate mobilization of resources markets show that broader
and deeper capital markets
will likely lead to better
investment, more growth,
increased employment and
higher standards of living.
Capital markets are better
It will be one of the suited for funding long
main options for domestic term projects and raising
investors to channel their
savings equity capital for building
businesses and creating
wealth.
2. Secondly, the capital markets create economic
opportunities for ordinary citizens that would otherwise
be denied them. Capital markets provide the chance to
participate in a wide range of investment opportunities
for retail and institutional investors through their
participation in collective investment schemes, pension
funds and listed securities. This allows for wealth
preservation and ease of transfer of wealth.
3. Thirdly, capital markets serve to manage systemic

risk through provision of market information and
enabling investors to choose asset classes based on their
risk preferences. They are an antidote to bank-centric
structures where most credit risks rest within the banking
system itself and exposes the government to fiscal risk
in the case of failures, as experienced in Ghana recently.
The policy objective is to minimize systemic risk from
diversification of funding sources through the capital
market.

CAPITAL MARKET IMPACT AND LINKAGES WITH GHANA’S DEVELOPMENT AGENDA
The development of the capital market will goals of Ghana’s development aspirations as
provide relatively cheaper finance and investment enshrined in the following documents:
to businesses in the real sector which will result 1. Medium-Term National Development Policy
in increase in production and services making Framework (2018 – 2021)
businesses more productive. This will have a ripple 2. Ghana Beyond Aid Strategy Document
effect on the creation of more jobs, higher standards 3. Ghana: Voluntary National Review on
of living, increase in savings and investments and the implementation of the 2030 Agenda for
poverty reduction. These effects reflect the main sustainable Development, June, 2019
STATE OF THE CAPITAL MARKET IN GHANA
The capital market in Ghana has made significant total market capitalisation to GDP took a nosedive
strides in its development over the past two from ~32% in 2015 to ~16% in 2019. However,
decades but it is still small relative to other domestic market capitalisation to GDP has seen a
emerging markets. It is dominated by government marginal increase over the last 5 years from 6.2%
domestic debt with total value outstanding at in 2015 to 6.5% in 20192. In terms of values, total
GH¢115 billion as at December 2019 representing market capitalisation remained relatively flat from
33% of GDP1 from just GH¢ 19.4 billion in 2015 (11% GH¢57.1 billion in 2015 to GH¢ 56.8 billion in 2019.
of GDP).
Domestic market capitalisation however witnessed
Market Capitalisation to GDP (GH¢ Billions) a significant increase from just GH¢ 11.2 billion in
Total market capitalisation has however remained 2015 to GH¢ 22.7 billion in 2019 representing a
relatively flat over the last 5 years. Unfortunately, healthy CAGR of 19.3%.
GH¢57.1 billion GH¢ 56.8 billion GH¢ 11.2 billion GH¢ 22.7 billion
Total Market Total Market Domestic Market Domestic Market

Capitalisation in 2015 Capitalisation in 2019 Capitalisation in 2015 Capitalisation in 2019
1
GSE, SEC, MoF I 2 GSE, SEC, MoF

Listed Companies million in 2019.
38
There were 38 equity listings on the Secondary trading activities on the
Ghana Stock Exchange with market debt market front have however
capitalisation of GH¢ 56.8 billion seen a tremendous uptick in both
(25% of GDP) as at 31 Dec 2019. number of volumes and values of
transactions. From just total trade
Additional listings have had a values of GH¢ 9.6 billion in 2015, the
limited impact on overall number of Number of equity values shot up to GH¢ 55.7 billion in
listed entities over the past 5 years listings on the Ghana 2019 representing a 55% CAGR over
as a result of delistings. There have Stock Exchange the period.
been 3 IPOs on the main market
since 2016 one of which was ADB, Asset Management Industry
with more than 95% of the shares The Asset Management industry in
currently held by the Central Bank. Ghana has experienced significant
The period however witnessed the GH¢ 2.8 billion growth especially over the past five
largest equity capital raised on the years. The funds under management
Ghana Stock Exchange with the excluding pension funds recorded a
listing of MTN Ghana, which raised slight dip from GH¢ 11.1 billion in
GH¢ 1.1 billion in 2018. Overall, December 2015 to GH¢ 10.4 billion
GH¢ 2.8 billion was raised through Total equity capital in December 2019 representing
6 IPOs (GH¢ 1.5 billion) and nine raised through IPOs a negative CAGR of 2.3%. The
rights issues (GH¢ 1.3 billion) within and Rights Issues reduction (negative growth) was
the last 5 years. due to the clean-up exercise which
led to revocation of the licenses of
The launch, in 2013, of the Ghana 53 Fund Managers some of whom
Alternative Stock market has seen had ceased operations and had
the listing of 5 equities as at the end GH¢ 9.6 billion significantly impaired portfolios.
of 2019.
Worthy of mention is the rapid
Level of liquidity growth of the collective investment
The level of liquidity on the equities Total trading activities schemes which increased from just
market compared with the total on the debt market in GH¢ 0.7 billion in 2015 to GH¢ 3.8
market capitalisation has been very 2015 billion in 2019 representing a CAGR
low over the years. The past two years of 51% over the 5-year period in
have however seen an improvement question.
in market turnover from under 1%
of market capitalisation per annum, Private pension funds under
to 1.1% in 2018 and 2019. This management, that is the Tier 2 and
therefore requires greater attention Tier 3, being managed by SEC-
and resources to drive liquidity to
GH¢ 55.7 billion licensed Fund Managers have
the range of 3 – 5% within the next increased significantly from GH¢
10 years. The total value traded on 2.6 billion in 2015 to GH¢17.4 billion.
the equities market however saw
healthy CAGR of 17.1% from GH¢ Total trading activities
151.3 million in 2010 to GH¢ 624.2 on the debt market in
2019

The growth of pension funds and life insurance with a crisis of confidence given the failures
industry are areas with the potential to expand of some licenced financial institutions due to
the investor base for the capital market. Both the toxic assets and misconduct;
pensions and life insurance industry are growing
at faster rates than the real sector of the economy. ii. The investor base is shallow and needs to
be deepened;
Several infrastructure developments have taken
place which have improved trade settlements, iii. Interest rates on borrowings remain
transparency and market participants’ access to elevated despite lower inflation, sustained
data. The Central Securities Depository maintains economic stability and growth, and greater
the central register of dematerialized securities political certainty;
and performs clearance and settlement for trades
conducted on the Ghana Stock Exchange, the iv. The government yield curve has improved
Ghana Fixed Income Market and the over-the- significantly with greater visibility on the
counter market. Trading in commodities has also issuance calendar and gradual formation of
received a boost with the establishment of the benchmarks. This needs to be sustained in
Ghana Commodity Exchange in 2018 trading order to have a reliable reference for medium
white and yellow maize, soya, sorghum, sesame to longer-term risk free rates;
and rice.
v. Financial literacy is generally low and the
However, despite these advances and all the capacity of intermediaries needs
potential benefits of future growth, the challenges improvement; and
faced by Ghana in the development of an effective
capital market remain significant. They include vi. The Securities and Exchange Commission
a wide range of issues that need a coordinated also faces significant obstacles in terms of
response to be resolved. Key among these are that: its human and financial resources and its
powers to act to prevent abuses.
i. The financial market as a whole is riddled

THE CAPITAL MARKET MASTER PLAN
The vision for the plan: “A deep, efficient, (ii) Pillar 2: Increasing the investor base
diversified and well-regulated capital market with
a full range of products attractive to domestic and (iii) Pillar 3: Strengthening infrastructure
international investors” has been translated into a and improving market services
set of four focused strategic pillars:
(iv) Pillar 4: Improving regulation,
(i) Pillar 1: Improving diversity of investment enforcement and market confidence.
products and liquidity of securities market
Each of these pillars is further broken down into a series of specific initiatives as follows:
1
Pillar
: Improving the diversity of creation of digital platforms for both of which are currently limited;
investment products and retail investors leveraging on the implementing more detailed
liquidity of securities market digitization of the banking sector; conduct of business regulation;
includes revision of the a refreshing of the investment establishing an enhanced
market models used and the guidelines for funds emphasising resolution framework within
introduction of market makers the need to look for diversification, Act 929 that extends beyond
with securities lending and short and issuer roadshows in key broker-dealers; strengthening
selling to support them; promotion overseas investor cities. the asset management industry
of real estate investment trusts
after the full resolution of
3
(REITS), simplification of Pillar
collective investment schemes : Strengthening toxic assets of affected Fund
(CIS); strengthening the repo infrastructure and Managers; training of trustees
market with introduction of improving market and custodians of collective
international standard agreements services includes the investment schemes as well
and supporting frameworks, a demutualization of as banks who handle trust
comprehensive review of taxation the GSE group; a review of the accounts; an overhaul of the
issues and incentives in the processes at CSD for handling licensing regime particularly
capital market; opening up retail delayed trades so that pre- the licences that involve
access to both the corporate and validation can be lifted; and handling client assets and
government bond markets and putting in place continuous money; implementation of
equities, and improvements to the professional education program the newly launched AML-CFT
venture capital framework. This for intermediaries. Also, complete
Guidelines; implementing
pillar also includes the setting up phasing out of dividend warrants
of a special forum for interaction to ensure shareholders receive risk-based supervision so
between Fintech providers and the dividends directly into their bank as to enable the regulator to
players in the capital market. accounts. Getting all issuers better direct its resources;
to establish investor relations and the rolling out of a
2
Pillar department. regulatory sandbox to facilitate
: Increasing the investor innovation.
4
base includes the Pillar
promotion of the simplified : Improving regulation,
CIS to the retail investors; enforcement and market
establishing a vibrant confidence includes
shareholder association, investment improving SEC resources
clubs, the deepening of relationship and powers to take early
with pension fund trustees; the and decisive enforcement action,
13 Securities & Exchange Commission Securities & Exchange Commission 13

Figure 1 below highlights the game-changing flagship initiatives to be implemented under the four pillars
of the Master Plan.
FIGURE 1: FLAGSHIP INITIATIVES OF MASTER PLAN
Digital Review of Investment

Demutualization of Promotion of REITs Transformation Policy for Pensions
GSE & CIS of capital market Funds / schemes
(mobile apps)
Introduction Issuance of Development of a

Introduction of
of Additional Municipal, Currency Trading
Market Makers
Commodities on GCX Infrastructure and Platform
Green Bonds
Training of Service
Securities Lending Providers especially Robust investor Improve information
and Borrowing custodians, trustees education flow to the capital
and other banks market by issuers

IMPLEMENTATION FRAMEWORK
A clear and effective framework of governance is The Steering Committee will be closely supported
critical to the successful implementation of the by a Secretariat led by a senior person with market
Master Plan. The proposed governance structure and project management experience, which will
includes a Champion, who will be the public leader organize the Working Group meetings, monitor
of the Master Plan, a Steering Committee to direct progress and costs, and report all issues that cannot
and oversee all aspects of the development and four easily be resolved to the Steering Committee.
Working Groups to oversee the implementation of
the initiatives. The four Groups envisaged under The Secretariat will be part of the Securities and
this Plan are as follows: Exchange Commission and resourced accordingly.
1. Markets and Products, The industry will be consulted regularly through an
2. Market Infrastructure, Industry Review Committee, which will comprise
3. Legal and Regulatory, and representatives of all significant sectors within the
4. Education and Research. market intermediaries and users.
A phased approach is envisaged for the implementation of the Capital Market Master Plan. The following
three phases have been identified:
Making the Market Attractive (2020 – 2022): Early initiatives that do
1
PHASE not have significant dependencies on others and for which the market
will be ready relatively quickly. Several of the initiatives are currently
ongoing, and include essential actions to increase market confidence,
such as resolution of toxic assets of Fund Managers, enhancing conduct
regulations and licensing requirements, broad investor education
programs, the demutualization of the GSE, opening up retail access to
government bonds and the introduction of market makers.
Increasing Competitiveness of the Market (2023 – 2025): This phase
2
PHASE will focus on deepening the quality and breadth of products, services
and facilities. It includes the development of a readiness program for
state owned enterprises; the delivery of taxation changes to promote
issuance and investment; the introduction of obligatory continous
professional development for securities intermediaries; and the
creation of an investor protection fund.
Introducing More Sophisticated Products and Consolidating Gains

Made (2025 – 2029): This phase will involve the deepening of earlier
3
PHASE initiatives and the growth of more complex products and services,
that are to some extent dependent on the successful implementation
of earlier initiatives, and on the consolidation of matters such as
price formation, education and awareness and the understanding of
risks. These include margin trading, opening up short selling to all
participants.

06. Introduction Ghana Capital Market Master Plan
BACKGROUND
1. Ghana’s Capital Market began to & II) were implemented in consultation with key
develop with the establishment of stakeholders to serve as government’s blueprint
the Ghana Stock Exchange in 1990 for transforming the financial sector especially the
with associated institutions such as capital market for the period 2003 – 2016.
broker-dealers, investment advisors
and Fund Managers. Over the past three decades, 2. Impact assessment of FINSSP I & II conducted
the market has gone through showed that about 80 percent
several extensive reforms of the recommendations
which have helped in the were implemented, thus,
rapid development of the yielding positive results.
market. These reforms served Initial interviews of market
as part of the key priority participants during the
goals of the Government scoping phase of the Capital
of Ghana enshrined in its Market Master Plan Project
developmental agenda to indicated that a lot more
diversify and modernize remained to be done to deepen
the economy to support and broaden the capital
economic growth, improve market. Trading volumes and
the living standards of its listings have not grown over
citizens and reduce poverty. the past 5 years even though
Government’s strategy to the economy has grown
achieve this agenda is to develop a strong financial significantly during this period. Even though total
system which includes a vibrant capital market market capitalisation has remained relatively
driven by market-based principles that effectively flat over the last 5 years from GH¢ 57.1 billion in
mobilizes and allocates resources needed to 2015 to GH¢ to GH¢ 56.8 billion in 2019, domestic
achieve sustainable development. To this end, capitalisation has more than doubled from GH¢
two Financial Sector Strategic Plans (FINSSP I 11.2 billion in 2015 to GH¢ 22.7 billion in 2019.
Ghana’s Capital Market began to develop with the establishment of

the Ghana Stock Exchange in 1990 with associated institutions such
as broker-dealers, investment advisors and Fund Managers.

Notwithstanding the recent growth 9, 11, 13 and 16 as illustrated in

in market capitalisation especially Figure 3. The CMMP is designed
on the domestic front, equity trading to identify, prioritise, drive and
has remained stagnant over the monitor initiatives and important
last 10 years with trading volumes development issues affecting the
for 2010 at 331 million and 2019 at capital market in Ghana. The MoF
324 million as shown in Figure 5. and SEC therefore constituted a
However, the Ghana Fixed Income Even though diverse industry working group
Market has been a source of growth with a clear mandate to oversee the
in trading and listing activity. At
total market development of the CMMP.
the end of 2019, the number of capitalisation
outstanding bonds were GH¢115 has remained 4. At the request of the MoF and
billion with trading values of GH¢ the SEC, the World Bank and DFID
55.7 billion. Trades were dominated
relatively flat agreed to support the development
by government securities and the over the last 5 of CMMP. The support entailed the
ESLA bond. years from GH¢ provision of local and international
57.1 billion in experts, sharing of experiences
3. The Securities and Exchange on the importance of sequencing
Commission (SEC) and the 2015 to GH¢ to and prioritization of actions to
Ministry of Finance (MoF) set a GH¢ 56.8 billion ensure sustainability, and overall
plan in motion to holistically tackle in 2019, domestic drafting of the CMMP. The SEC has
the challenges of the Capital Market been the direct beneficiary of the
with the development of a Capital capitalisation support provided and has led the
Market Master Plan (CMMP). This has more than development of the CMMP.
initiative also has the support of doubled from
the Government of Ghana as it 5. An initial scoping study was
aligns with delivering on Ghana’s
GH¢ 11.2 billion undertaken to identify the issues
national priorities of increasing in 2015 to GH¢ affecting the development of the
manufacturing and the agricultural 22.7 billion in capital market; and to provide
value chain, strengthening evidence-based gaps in current
institutions and the rule of law,
2019. development framework. After the
strengthening infrastructure scoping study, a capital market
and technology adoption to blueprint report was developed
enhance business efficiency and and presented to stakeholders at
enhancement of public services a workshop for their input. The
delivery. The Plan would also help workshop served as a platform
in achieving Ghana’s Sustainable to foster and guide a discussion
Development Goals 2, 4, 5, 8, between all stakeholders on the

creation of an appropriate development plan 6. This Master Plan therefore, is a document that
for Ghana’s Capital Market. The Securities defines the strategy to accelerate the development
and Exchange Commission is aware that to be of Ghana’s Capital Market over the next ten years
successful, a development plan needs to harness (2020 – 2029) and builds on past and current efforts
the ideas, contributions and commitment of all by both the private sector and the government.
stakeholders. After the workshop, stakeholders’
concerns were collated and incorporated in 7. The need for a plan to develop the capital market
refining the blueprint and developing it into the in Ghana is rooted in three main public policy
Capital Market Master Plan. objectives:
a
a. Firstly, to fund Ghana’s development priorities, Government requires
efficient public borrowing through a deep capital market and robust growth in
the private sector. These factors also underpin economic growth. Numerous
studies conducted on developed markets shows that broader and deeper
capital markets will likely lead to better investment, more growth, increased
employment and higher standards of living. Capital markets are better
suited for funding long-term projects and raising equity capital for building
businesses and creating wealth. For a private sector-led economy, access to
capital is crucial for the growth of businesses, thus a robust capital market
that invests in debt and equity of issuers supports long-term economic
growth as jobs are created from these businesses.
b
b. Second, capital markets create economic opportunities for the ordinary
citizen that would be otherwise unavailable to him/her. Capital markets
provide the chance to participate in a wide range of investment opportunities
by sharing risk and the required minimum investment to access those
opportunities. For instance, mutual funds allow retail investors to gain
exposure to securities that have high minimum subscription levels and would
ordinarily be out of the reach of the average retail investor.
c
c. Third, capital markets serve to manage systemic risk. They are an antidote
to bank-centric structures where the majority of credit risk rests within the
banking system itself and exposes the government to high levels of fiscal risk
in the case of bank failures, as experienced in Ghana recently. The recently
established Financial Stability Council will play an integral role in addressing
systemic risk and with a membership incorporating all the financial sector
regulators, will recommend solutions that use the capital markets to address
regulatory issues, identification of risks, diversification, and preparedness for
crisis.
CAPITAL MARKET’S IMPACT ON THE REAL SECTOR & INDIVIDUALS
8. Capital markets play a vital role in channeling to businesses in the real sector thereby driving
investment into the economy to help drive growth, an increase in production and services, making
prosperity, creation of employment opportunities businesses more profitable. This will have a ripple
and ultimately improvement on people’s everyday effect on the creation of jobs, higher standard of
lives. The development of the capital market will living, increase in savings and investments and
help to lower the domestic cost of capital, resulting finally, poverty reduction (Figure 2 below).
in relatively cheaper finance and investment

Ghana Capital Market
1. Robust and Masterframework
clear regulatory Plan
2. Venture Capital/Private Equity
3. Deeper & more liquid Equity and Debt Markets
4. Commodities Financing
5. Risk Management/Diversified Capital Market
products
1. Increased Employment
2. Higher Standards of Living
Capital 3. Poverty Reduction
4. Increase in Savings/Investments
Market 5. Increase in Entrepreneurs
FIGURE 2:
CAPITAL MARKET
IMPACT ON THE Real
REAL SECTOR AND Sector
INDIVIDUALS 1. Growth of Businesses

2. Increase in Agricultural Production
3. Better Corporate Governance Impact on
4. Increase in GDP Individuals
LINKAGE BETWEEN GHANA’S DEVELOPMENT AGENDA AND THE CAPITAL MARKET MASTER PLAN
The implementation of the Capital Market Master Plan will result in growth of businesses and increased
production which will result in employment, high standard of living and eventually, poverty reduction.
The development of the Capital Market fully aligns therefore with Ghana’s development aspirations as
enshrined in the following documents:
1 2 3
Ghana Beyond Aid Strategy Medium-Term National Ghana: Voluntary National
Document3: Development Policy Review on the Implementation
This national transformation Framework (2018 – 2021)4: of the 2030 Agenda for
document emphasizes This policy intervention Sustainable Development,
increased manufacturing and is aimed at restoring the June 20195:
high value services that will economy, transforming The document is based
result in providing jobs and agriculture and industry, on priorities mirroring the
prosperity to all Ghanaians. strengthening social protection, four pillars of sustainable
The focus on private sector revamping economic and social development in the Ghanaian
as an engine of growth will infrastructure and reforming context – economic,
also enhance Government’s public services delivery. In social, environmental and
tax base, reducing the reliance the end, the intervention is institutional. It provides
on foreign aid for critical expected to create jobs and key actions needed in
government expenditures. increased productivity resulting implementing Sustainable
in poverty reduction. Development Goals (SDGs)
with emphasis on job creation
and growth of businesses.
3
https://thinknovate.org/wp-content/uploads/2019/05/Ghana-Beyond-Aid-Charter-and-Strategy-Document.pdf I 5 https://www.mofep.gov.gh/sites/default/files/news/Ghanapercent27s-SDG-Budget-Baseline-Report-Aug-09-18.pdf
4
https://s3-us-west-2.amazonaws.com/new-ndpc-static1/CACHES/PUBLICATIONS/2018/08/23/Medium-term+Policy+Framework-Final+June+2018.pdf

FIGURE 3: LINKAGE OF THE MASTER PLAN TO NATIONAL DEVELOPMENT STRATEGY
Capital Market Master Plan National Priorities Sustainable Dvt. Goals
Creating diversity of Increase Manufacturing CLIMATE ZERO

investment products and and Agricultural Value ACTION HUNGER
PILLAR 12 liquidity of securities Chain

market
Increasing the investor Strengthen Institutions GENDER QUALITY
PILLAR 2 base and the Rule of Law

EQUALITY EDUCATION
Strengthening infrastruc- Strengthen Infrastructure INDUSTRY,INNOVATION DECENT WORK AND
ture and improving market and Technology adoption

ANDINFRASTRUCTURE ECONOMIC GROWTH
PILLAR 3 services to enhance business
Improving regulation, Enhance Public Services PEACE, JUSTICE

AND STRONG
SUSTAINABLE CITIES
AND COMMUNITIES
enforcement and market Delivery INSTITUTIONS
PILLAR 4
OVERVIEW OF GHANA’S CAPITAL MARKET
9. The Capital Market in Ghana has seen significant at 25 percent of GDP as at 31 Dec 2019.
advances in its development over the past decade,
but is still relatively small compared to other 10. Institutional investors such as pension funds,
emerging markets. The market is dominated collective investment schemes and insurance
by government domestic debt with total value companies are growing but have few investment
outstanding at GH¢115 billion, representing about options in capital market products since current
33 percent of GDP as at the end of 2019. The tradable options are limited to government debt,
establishment of the Ghana Fixed Income Market a few corporate bonds and a few equity listings.
has helped to improve liquidity on the fixed income Assets under management at December 2019 was
market, though liquidity remains a challenge. GH¢26.2 billion, representing 6.8% of GDP. This
represents a significant growth from December
Corporate bonds, with total outstanding amount 2015 AUM of GH¢13.7 billion. The growth has been
as at the end of 2019 being GH¢ 7.97 billion, driven by the reforms in the pension sector, which
are growing in representation, but currently ceded a portion of pension assets to be managed
dominated by non-bank financial institutions and a by Fund Managers (Tier 2 and Tier 3 contributions)
government sponsored SPV, ESLA Plc. ESLA alone and administered by Pension Trustees. The Tier 2
has issued GH¢ 6 billion representing 75 percent and Tier 3 assets increased from GH¢ 2.6 billion
of the outstanding issuance as at Dec 2019. Equity in 2015 to GH¢ 17.4 billion at the end of Dec 2019.
market development has been painstakingly slow.
The market has attracted few equity listings and
many listed equities experience limited trading.
There were 38 equity listings on the Ghana Stock
Exchange’s main board with market capitalisation

FIGURE 4: LISTED GOVERNMENT OF GHANA DEBT TO GDP (GH¢ BILLIONS)
50%
349.5
300.6 40%
256.7
33%
215.1 30%
180.4
27%
25%
20%
17% 114.8
70.1 73.7 10%

11%
37.0
19.4
0
2015 2016 2017 2018 2019
Listed Gov’t Debt (LGD) GDP LGD to GDP
FIGURE 5 MARKET CAPITALISATION TO GDP (GH₵ BILLIONS)
FIGURE 5: MARKET CAPITALISATION TO GDP (GH¢ BILLIONS)
70.0 31.7% 35.0%

58.8 61.1
60.0 57.1 56.8 30.0%
52.7
50.0 24.5% 25.0%
22.9%
20.3%
40.0 16.3% 20.0%
30.0 15.0%
8.4%
20.0 10.0%
6.5%
6.3% 25.4
22.7
10.0 6.2% 5.1% 5.0%
16.2
11.2 10.9
- 0.0%
2015 2016 2017 2018 2019
Dom. Mkt Cap Total Mkt Cap MC to GDP Dom MC to GDP
FIGURE 6: LISTED EQUITIES
39 41 40 39 38
4 4 4 5 5
2015 2016 2017 2018 2019
Number of Listed Equities - Gax Number of Listed Equities - Main Mkt.
Source: GSE, SEC, MoF

FIGURE 7: TRADING VALUES TO MARKET CAPITALISATION (GH¢ BILLIONS)
70 1.2%
64.4 1.1%
61.2 62.9 1.1%
60 1.0%
57.3 57.1
0.9% 61.1 56.8
52.7
50
47.3 0.8% 0.8%
0.7%
40 0.8%
0.5% 0.6%
30 0.5%
0.4%
20.1 0.4%
20
0.2% 0.2%
10
0.15 0.45 0.10 0.46 0.35 0.25 0.24 0.52 0.66 0.62
- 0.0%
2015 2016 2017 2018 2019 2015 2016 2017 2018 2019
Value Traded (GHS Bn) Market Cap (MC) - GHS BN Value Traded to MC
FIGURE 8: HISTORICAL ANNUAL TRADING VOLUMES
TRADING VOLUMES - EQUITIES 3,817

Shares Traded in Millions
5,000
4,000
3,000
2,000
420
323
331
313
253
1,000
246
201
207
218
-
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: GSE, SEC

FIGURE 9: ASSETS UNDER MANAGEMENT (GH¢ BILLIONS)
25.0
17.9
20.0 14.6
14.5
14.2
15.0
10.4
11.7
10.0
6.5
7.2
4.4
3.8
2.6
2.5
2.2
5.0
1.1
0.7
-
2015 2016 2017 2018 2019
CIS Others Pension Funds (T2 & T3)
FIGURE 10: HISTORICAL ANNUAL TRADING VOLUMES – DEBT MARKET (NUMBER)
TRADING VOLUMES - DEBT MARKET

55.7
140,000
30.7
120,000
36.0
100,000
15.6
80,000
9.6
60,000
40,000
20,000
-
2015 2016 2017 2018 2019
Source: GSE, SEC, NPRA

FIGURE 11: HISTORICAL ANNUAL TRADING VALUES - DEBT MARKET
TRADING VALUES - DEBT - GHS BILLIONS
55.7
60.0
50.0
36.0
40.0
30.7
30.0
15.6
20.0
9.6
10.0
2015 2016 2017 2018 2019
MACROECONOMIC AND POLICY ENVIRONMENT
11. The period 2012 to 2016 saw Ghana pass through Consolidated Bank Ghana Limited (CBG), as well
difficult macroeconomic challenges that resulted as the capitalisation of the Ghana Amalgamated
in stalled economic growth, with GDP growth Trust (GAT). Additionally, with the President’s
averaging 3.8% during the last three years of the directives to fully pay all depositors whose funds
period. That period was also characterized by large were locked up with the failed SDIs and MFIs,
budget deficits, pronounced inflation (18.7% in an amount of GH¢5 billion was allocated. This
2016), higher average lending rates (32.1% in 2016) brings the total expenditure on financial sector
and the steep depreciation of the local currency. interventions as of June 2020 to GH¢18.6 billion
Nevertheless, macroeconomic performance (4.8% of GDP).
improved significantly under the IMF Extended
Credit Facility (ECF) covering the period 2015 to 13. The Securities and Exchange Commission
April 2, 2019. Growth in both 2017 and 2018 was (SEC) also embarked on a series of reforms in 2018
robust, buoyed by increased oil production with and 2019 which culminated with the sanitization
Ghana being touted as one of the fastest growing of the asset management industry, which entailed
economies in Africa in 2018. Inflation has declined the revocation of the licenses of 50 Fund Managers
from 17.5% in 2016 to 9.4% in 2018 and reduced in November 2019. The assets under management
further to 7.9% in Dec 2019. of the revoked Fund Managers at the time of
revocation was GH¢ 8.1 billion. The liquidation of
12. The Bank of Ghana (BoG) resolved nine these firms and addressing investor compensation
insolvent banks over a period of 18 months, in was ongoing at the time of preparation of this
line with its commitment to clean up the banking document. Government has also committed an
sector. The Bank of Ghana also increased the amount of GH¢3.1 billion (0.78% of GDP) towards
capital requirements for banks from GH¢ 120 supporting investors in failed asset management
million to GH¢ 400 million in order to strengthen companies regulated by the SEC. This would
the sector. As at the end of first quarter 2020, a total bring the overall cumulative total Government
amount of GH¢13.6 billion (3.5% of GDP) had been expenditure for the failed financial institutions to
spent on the resolution of failed banks, Specialised GH¢21.62 billion.
Deposit-taking Institutions (SDIs), Micro Finance
Institutions (MFIs), the establishment of the Structural reforms to strengthen public financial

3.8%
Average GDP
growth from 2012 to
2016
1. The period 2012 to 2016 saw
Ghana pass through difficult
macroeconomic challenges
that resulted in stalled
18.7%
economic growth.
2. Macroeconomic
performance improved
Average inflation
from 2012 to 2016 significantly under the IMF
Extended Credit Facility (ECF)
covering the period 2015 to
April 2, 2019.
32.1% 3. The Bank of Ghana (BoG)

resolved nine insolvent banks
over a period of 18 months.
Average lending rate
from 2012 to 2016
4. The Securities and
Exchange Commission
(SEC) also embarked on a
series of reforms in 2018 and
50
2019 which culminated with
the sanitization of the asset
management industry.
Number of
Fund Managers
whose licenses
were revoked in
November 2019

management and oversight of the state-owned of the economy and respect for the rule of law. This
enterprises continue to be implemented. Robust focus has helped the capital market in ensuring
growth is expected to be sustained in 2019 into continuity in its development. If a master plan
2020, propped up by sturdy private consumption for the development of capital markets is to be
and healthy investment activity growth. Strong successful, it will be important that the government
demand for Ghana’s key commodity exports and maintains the focus and discipline that has
increased productivity in the agricultural sector underpinned recent stability and will enable an
contributed to real GDP growth of 7.9% in 2019. The attractive economy and investment environment.
outlook for growth in 2020 has been clouded by the
impact of the COVID-19 pandemic. However, the
focus on digitization of government operations, MONEY MARKET AND GOVERNMENT DEBT
improved use of technology by the private sector
and buffers established in the first quarter of 2020 16. The money market is the market in which
have reduced the net impact of the pandemic on short-term borrowing and lending is accessed. It
Ghana’s economic outlook. It is expected that includes lending between financial institutions,
the economy will grow at 0.9% in 2020 (revised particularly banks, and the issuance of short-
downward from pre- term commercial paper
pandemic outlook of 6.8 by large corporations.
percent), and 4.7% in 2021. Money market
instruments are therefore
14. However, there remain debt instruments and
significant challenges. include the interbank
These include a continued market borrowings,
dependence on primary Treasury bills, BoG bills,
commodity exports repurchase agreements
and a need for fiscal and commercial paper.
discipline in the context The money market
of elevated government is dominated by
financial needs. Foreign government securities
exchange reserves fell in and it plays a critical
2018 but climbed in 2019, role in the execution
underlining Ghana’s of BoG monetary
exposure to shifting policy through its open
investor sentiment and market operations. As
external shocks. The stock at the end of December
of Net International Reserves (NIR) increased 2019, the total outstanding listed money market
to US$5.19 billion at end-December 2019, from instruments (91-day – 182-day maturity) was
US$3.85 billion at end-December 2018, indicating GH¢27.5 billion compared with GH¢15.5 billion in
a build-up of US$1.34 billion. Gross International 2018 representing a 77% growth rate.
Reserves (GIR) also increased by US$1.39 billion
to US$8.42 billion at end December 2019, sufficient 17. One especially key component of the money
to cover 4.0 months of imports compared to 3.6 market is interbank secured lending using
months at end-December 2018. Gross international repurchase agreements (repo transactions). These
reserves are expected to cover 4 months of import repo transactions are discussed below in more
for 2020 and 2021, partly due to the successful and detail in the section on interbank transactions.
historic US$ 3 billion 3-tranche Eurobond issued in
February 2020 which was 5 times oversubscribed. The Interbank and Treasury bill markets are
active in Ghana. Money market interest rates
15. The government’s economic and political have moderated in the past 3 years, (2017 – 2019)
philosophy has in recent years converged on a reflecting diminishing inflation expectations and
common set of principles which include emphasis policy rate easing. This part of the money market
on the private sector as the main engine of growth dominates the financial markets in Ghana, owing to

the volatility of the macroeconomic policy rate has fallen steadily over
environment which makes short- the past three years. As at the end of
term financial instruments more 2017, the policy rate was at 20% but
attractive. it had fallen to 17% as at the end of
the year 2018 and further declined
19. The private sector money market to 16% by December 2019.
instruments is dominated by fixed
deposits and commercial paper which 21. The BoG also manages the
has increased in importance over the supply of money through the
past 5 years, with Fund Managers, Fund Managers issuance or retirement of BoG bills
mutual funds and pensions being in the interbank market.
the main demand participants. Fund had invested
Managers had invested GH¢ 7.1 GH¢ 7.1 billion
billion in money market instruments
as at December 2019. They are in money market INTERBANK MONEY MARKET
becoming increasingly important instruments as
players in the money markets. 22. Ghana has a vibrant interbank
at December market where banks lend funds to
2019. They each other. The total value of trades
increased from GH¢ 80.9 billion
are becoming in 2018 to GH¢ 119.5 billion at the
CENTRAL BANK OPERATIONS
WITH BANKS increasingly end of December 2019. Maturities
are short, usually overnight. The
important number of all repo transactions
20. Commercial banks borrow from players in the settled by CSD increased by 9.8%
the Bank of Ghana to meet liquidity from 5,427 in 2018 to 5,957 in 2019.
challenges when their cash on hand money markets. The settlement value of all the repo
is low before the close of the business transactions also increased by 25.8%
day. Borrowing from the Central Bank to GH¢ 201.6 billion in 2019 from
is convenient because it is always GH¢ 160.2 billion in 201820. The
available, and the lending process interbank rate has fallen from 23.9
includes no negotiation or extensive percent at the end of 2015 to 15.2%
documentation. The downside, in 2019 reflecting diminishing
however, is the interest rate or the inflation expectations and policy
Policy rate at which the Central rate easing.
Bank lends to banks, is higher than
borrowing from another bank. The

23. Banks deal directly with each other in the 25. The localization and adoption of the Global
interbank market and this has improved banks’ Master Repo Agreement (GMRA) by Bank
feel for the state of the market and led to closer of Ghana in 2019 should increase liquidity
relationships between market participants. and pricing transparency in money markets,
Transactions are done by a pledge to the lender thereby helping to properly price long term risk
with Central Securities Depository (CSD) blocking and support transmission of monetary policy
the securities pledged while the Ghana Interbank decisions. The GMRA also provides a structure for
Payment and Settlement System (GhIPSS) which securities lending between financial institutions
is Ghana’s Real Time Gross Settlement (RTGS) and professional investors. Securities lending is
system is used to make payment. This has worked essential to support short selling, which in turn
adequately to date but when there is a default, the is a key facilitator of many important features of
pledged securities cannot be transferred to the active capital markets, including market making,
lender immediately. The lender must ask the CSD hedging, creating exchange traded funds (ETFs),
to intervene and to transfer the securities to them, and derivatives.
for which the CSD requires letters of indemnity.
The limitations therefore of the interbank market
is the lack of documented right to the security held INTEREST RATE ENVIRONMENT
and there is no carve out from insolvency law for
26. The high level of interest rates in Ghana has
this approach. In addition, there is no integrated
continued to be a significant source of concern
legal documentation.
as it hinders the development of an effective and
24. A more usual active bond market.
structure for these While average
transactions, which lending rates have
addresses these and declined from 32.1%
other problems, is in December 2016 to
the repo transaction 23.6% in December
mentioned earlier. 2019, they remain
A repo transaction significantly higher
is effectively a than the Monetary
temporary transfer Policy Rate of 16.5%
of cash and in December 2019.
collateral between The prevailing level
the two institutions of rates do not reflect
under an agreement the macroeconomic
that is specially stability Ghana has
constructed so as to ensure that beneficial enjoyed in recent years, and the entrenchment
ownership of the collateral remains with the of fiscal discipline and political stability across
original holder and that the bankruptcy of either election cycles. The high interest rates pose a
party will not prevent the transaction from being challenge to the attractiveness of stocks given
closed down with no damage to the interests of relatively lower dividend yields and recent weak
the other party. These agreements also protect performance.
the original holder from accounting and taxation
problems that arise from collateral transfers. The 27. At the apex of the interest rate regime is the BoG
newly introduced master repo agreement seeks Policy Rate which serves as a key benchmark. It is
to address the shortfalls in the current framework. charged on (overnight) short-term credit extended
The Corporate Insolvency and Restructuring Act to banks to replenish their liquidity shortfalls. It
2020 (Act 1015) has also been prepared to enable therefore signals the cost of funds available to the
effective implementation of derivative transactions banks as a last resort and should be transmitted
in the event of default. The tax regime may need throughout the financial system. However, because
to be reviewed to ensure that it does not create the use of central bank funds is an exception, the
problems for repo transactions around interest cost of capital of banks is not impacted much by
payments or additional transaction costs. the policy rate. The banks’ lending rates have

remained high while deposit government issues securities,

rates are low. For example, banks it has to pay a high price in the
average lending rate and deposit form of interest to be able to raise
rate as at the end of December its financing target because of
2019 were 23.6 percent and resource limitations. The collapse
11.5 percent (for 3-month time of several banks, savings and The collapse
deposits) respectively, indicating loans companies and finance
a spread of 12.1 percent while houses over the past two years
of several
the policy rate was 16 percent. has also interfered with pricing. banks, savings
Factoring in inflation, banks’ real The collapse has created a riskier and loans
lending rates have been high environment which means
at around 15.7%, while deposits that investors will demand risk
companies and
registered real returns of 3.6% as premium, thus sustaining the finance houses
at the end of December 2019. high level of interest rates that has over the past
interfered with pricing of risk. The two years has
28. Corporate loans are generally nature of the yield curve which is
priced off the Treasury bill almost flat for medium to longer- created a riskier
interest rates. For well-established dated bonds has also not helped environment
corporates, the spread can be with pricing as investors are not which means
approximately 200 to 300 basis adequately compensated for the
points. The high interest rate risk of investing in longer-dated that investors
environment has therefore instruments. will demand
forced businesses that need long risk premium,
term financing to borrow on a
short-term basis (2-3 years) and
thus sustaining
GOVERNMENT BONDS the high level of
subsequently rollover the facility.
This increases the overall cost of interest rates that
borrowing and potential defaults 30. Total outstanding bonds
given limited moratorium granted issued by the Government of
has interfered
to borrowers. Ghana (GoG) at December 2019 with pricing of
had grown to GH¢115 billion risk.
29. Government borrowing to from GH¢74 billion in December
finance budget deficits has been 2018 representing 56% growth.
one of the major factors that The growth was largely seen on
have sustained the high interest the 5-year and the 10-year tenor
rate regime in Ghana. When securities and the issuance of the

Following recommendations of the SEC’s medium-term

strategic plan and the Fixed Income Working Group, key
stakeholders in the financial market set up the Ghana Fixed
Income Market (GFIM) in 2015.
Eurobond in 2019. All these securities are listed since GFIM was established, the value of secondary
on the GSE, with trades being executed either on trading in GoG bonds and corporate bonds has
the GSE platform, or Bloomberg’s e-bond trading risen from GH¢9.6 billion in 2015 to GH¢48 billion
platform and settled through the CSD. Currently, in 2019.
there are no benchmarks or on-the-run Treasury
issues for each maturity. 33. The BoG issues securities on behalf of the
government and has licensed financial institutions
31. In recent years, the government has shifted its called Primary Dealers (PDs) to participate in the
issuance strategy by focusing more on medium wholesale auctions of GoG securities. The roles of
and longer-dated instruments. Government’s high the PDs are to (i) take up, market and distribute the
borrowing requirements to finance its activities primary issuance of GoG Securities, (ii) actively
has increased owing primarily to lower-than- participate in the secondary market for GoG
expected revenues, limited fiscal space and interest Securities, thereby, facilitating price discovery, (iii)
cost burden. Government therefore resorted developing liquidity in the government securities
to borrowing from the domestic market, thus, market and (iv) to be an active and effective
increasing its debt stock significantly especially in participant in the BoG’s Open Market Operations
medium and long-term debt. The yield curve now (OMO). Unfortunately, the PD concept has not
stretches to 15 years but there are pricing issues resulted in effective distribution of government
with the longer-dated instruments which make securities, prompting the Ministry of Finance to
them less attractive. Although significant progress create a new form of intermediary called Joint
has been made in the development of both money Book Runners (JBR) who also have access to the
markets and longer dated government debt, primary market and take fees for distribution.
secondary trading remains an issue.
34. The framework for secondary trading of bonds
32. Following recommendations of the SEC’s needs to be enhanced and made more accessible to
medium-term strategic plan and the Fixed Income retail investors through digital channels. Extensive
Working Group, key stakeholders in the financial education is required to embed the concept of
market set up the Ghana Fixed Income Market long-term investing in the general public in order
(GFIM) in 2015. These stakeholders were led by to increase retail demand for government bonds as
the Bank of Ghana (BoG), Ghana Stock Exchange a viable investment avenue.
(GSE), Central Securities Depository (CSD),
Ghana Association of Bankers, the Ministry of 35. The shape of the yield curve is upward sloping
Finance (MoF), Financial Market Association but almost flat for medium to longer-dated bonds.
(ACI Ghana) and the Licensed Dealing Members This means that there is very little price differential
(LDMs) of the Ghana Stock Exchange. The among the two-to-fifteen-year bonds making
objectives for the GFIM included providing an investment in longer-dated bonds unattractive.
orderly and transparent and efficient market for all This may explain the lack of distribution of
fixed income and similar securities and bringing government securities by the primary dealers to
secondary trading activities in fixed income investors due to investors’ affinity towards short-
securities in Ghana to international best practice term securities.
standards. This move has significantly improved
secondary trading in GoG securities. For example,

FIGURE 12: DOMESTIC YIELD CURVE (AT CONSTANT MATURITY), 2018 & 2019
2018 2019
22.0
20.0
18.0
Interest Rates (%)
16.0
14.0
12.0
10.0
FIGURE 13: EVOLUTION OF GHANA’S EUROBOND YIELDS, 2014 - 2019
2022 EUROBOND 2023 EUROBOND 2026 EUROBOND 2027 EUROBOND 2029 EUROBOND
2030 EUROBOND 2032 EUROBOND 2049 EUROBOND 2051 EUROBOND
18
16
14
12
Yield (%)
10
0
Oct- 17
Feb- 18
Dec- 17
Aug-14
Oct.-14
Aug-16
Aug-19
Aug-18
Aug-15
Aug-17
Dec-14
Dec-16
Dec-19
Feb-16
Dec-18
Feb-19
Apr-16
Apr-19
Dec-15
Apr-18
Feb-15
Jun-16
Jun-19
Feb-17
Jun-18
Apr-15
Apr-17
Jun-15
Jun-17
Oct-16
Oct-19
Oct-18
Oct-15
Source: Bloomberg

accounting for the low turnover of the market is

CAPITAL MARKET INSTRUMENTS - SUPPLY
the limited free float of shares at the Ghana Stock
Exchange.
36. The corporate bond market is nascent with
a very limited number and type of issuers – ten 38. The Ghana Commodity Exchange (GCX)
listed bonds with total amount outstanding being became operational in November 2018 with
GH¢ 8.0 billion. The limited number of corporate maize (white and yellow) and soya as the main
bonds, coupled with the small size of amount commodities. Sorghum, sesame and rice have
raised, provides little scope for secondary trading. since been added. However, GCX trading is
Among the reasons for the lack of issuer interest limited to spot trades and is seeking to expand its
in corporate bonds has been the unwillingness of warehouse footprint across the country.
private issuers to meet the high demands attached
to listing such as transparency and transaction
costs as well as limited flexibility in public debt CORPORATE BONDS
markets relative to bank loans.
39. The corporate bond market in Ghana is currently
37. In the case of the equity market, growth has small but it’s projected to grow significantly. There
been painstakingly slow. There were 38 equity were ten bond issuers with GH¢8.0 billion in issue
listings on the Ghana Stock Exchange with market at the end of 2019, which is small compared to
capitalisation at 25% of GDP as at December 2019. outstanding GoG bonds of GH¢115 billion. Most
Liquidity is a major challenge due to limited float of the companies that have listed bonds are in the
and limited investor interest as many listed shares financial sector with maturities ranging from 3 to
simply do not trade. The value of equities traded in 10 years (Table 1).
2019 was GH¢ 624 million which represents about
1.1% of total market capitalisation. A major factor
TABLE 1: Issuers of Corporate Bonds

Name of Issuer Sector Amount Outstanding Tenor
(GH¢ million)
AFB Loans Limited Financial 234.3 5, 6 & 7 years
Bayport Financial Services Financial 206.5 3 & 5 years
Bond Savings and Loans Financial 70.0 3 years
Dalex Finance & Leasing Company Financial 17.5 2 years
Edendale Properties Plc Real Estate 8.0 3 years
ESLA Bond Energy 6,000.0 7 & 10 years
Izwe Home Loans Financial 80.0 3 & 5 years
Ghana Home Loans Financial 9.6 3 years
Quantum Terminal Limited Petroleum 45.0 3 years
PBC Limited Agricultural 362.3 1 year
40. However, notably absent from the list of is relatively strict, making it inefficient for banks to
corporate issuers are banks who in most countries issue bonds; and (ii) pricing may be unattractive as
are dominant in the bond market as they issue the bonds are likely to be priced at 100bp to 300bp
bonds in order to manage the mismatch between above the GoG yield curve, which is already high.
their assets and liabilities. This absence of banks
is attributable to two main reasons: (i) the BoG 41. Apart from the banks, there is also a general
definition of Tier II capital (the types of debt that reluctance of other potential issuers to come to the
can count as capital in the prudential regulations) market. Among the reasons for the lack of issuer

interest in bonds are the following: 42. Secondary trading in corporate bonds is
negligible compared to the equity and government
a. Cumbersome issuance processes which debt markets, but this is not unusual in private
are the same as or very similar to those for sector corporate bonds. This is because of factors
equity. This makes bank loan processes inherent in the nature of these bonds:
much more attractive to a borrower.
a. They are generally relatively small in size,
i. Equity-focused processes usually particularly in smaller economies.
include lengthy approval processes
which create risks for both bond b. They are held by a small number of
issuers and bond-investors. For both investors, largely institutions that bought
issuers and investors, timing and with the intention of holding the bonds to
speed to market are key since there maturity. These investors are not likely to sell
are competing demands on liquidity
and management time. unless they are rebalancing their portfolios,
even if there are movements in prices.
ii. Equity-based approaches
also include high demands for c. The securities are held in large blocks
transparency of information that is which are best negotiated bilaterally rather
relevant to equity investors, such than through automated platforms, with
as the detail of governance and subsequent “post-trade” reporting to the
senior management remuneration. Exchange or settlement framework.
Many bond issuers regard these
disclosures as onerous and are
therefore reluctant to make them. 43. ESLA plc dominated both trading volumes and
values of the corporate bond market. The entity
b. Perceived high transaction costs, traded 2,731 volumes in 2018 compared with 1,989
in 2019 with values of GH¢ 4.7 billion and GH¢ 3.8
c. Historical macro-economic instability, billion respectively.
d. Lack of clear guidelines on corporate
bond issuance, EQUITIES
e. Limited investor base and
44. The GSE has 38 equity listings as at the end
f. Lack of independent credit ratings.
of December 2019. A total amount of GH¢2.8
billion has been raised since 2015 on the Exchange
through six IPOs and nine Rights Issues.
TABLE 2A: Primary Issuances Of Equity - IPOS
Issuer Type Year Amount Raised

(GHC Millions)
Scancom Ghana Limited IPO 2018 1,146.59
Digicut Advertising and Production Ltd. IPO 2018 9.51
Access Bank Limited IPO 2016 29.62
ADB Bank Limited IPO 2016 325.78
Intravenous Infusions Ltd. IPO 2015 6.83
HORDS Limited IPO 2015 4.00
TOTAL 1,522.33

TABLE 2B: Primary Issuances of Equity - Rights Issues
Issuer Type Year Amount Raised

(GHC Millions)
Access Bank Limited Right Issue 2018 221.18
Enterprise Group Ltd Right Issue 2018 219.72
Republic Bank Ghana Ltd. Right Issue 2018 255.00
Societe Generale Ghana Limited Right Issue 2018 168.94
HFC Bank Ltd. Right Issue 2017 50.56
Ghana Oil company Ltd Right Issue 2016 176.60
Guinness Ghana Breweries Ltd. Right Issue 2016 180.00
Societe Generale Ghana Limited Right Issue 2016 38.30
Mega African Capital Ltd Right Issue 2015 4.30
TOTAL 1,314.60
45. Market capitalisation has increased from years. So far, there are only 5 listings on GAX. The
GH¢20.1 billion in 2010 to GH¢ 56.8 billion in low levels of listings on the GAX is attributed partly
2019 due to gains in both prices and listings. This to lack of awareness of its existence by SMEs. The
represents a compounded annual growth rate of timing of the launching of the GAX also coincided
12.2%. Notable listings since 2010 include Tullow with challenging economic conditions during the
Oil, Access Bank and MTN, a telecommunication period 2014 to 2016. This did not favour equity
giant in Ghana. In relation to GDP, however, investments as potential investors had short-term
capitalisation fell from 31.7% of GDP in 2015 to investment horizons and thus, preferred to remain
16.3% in 2019, owing to faster growth of GDP invested in money market instruments.
compared to the market. The main sectors of the
economy represented at the exchange include 48. The Venture Capital Trust Fund (VCTF) was
the financial sector, manufacturing, mining, oil set up in 2004 through an Act of Parliament
and gas, and telecommunication, even though (VCTF Act 680) to provide long-term capital and
representation for the mining, oil and gas, and technical support to enable Small and Medium-
telecommunications is with single entities. scale Enterprises (SMEs) to grow. This support is
carried out through partner financial institutions
46. The GSE Composite Index (GSE-CI) is the (Venture Capital Financing Companies) who act
major stock market index which tracks the as Fund Managers. Currently VCTF channels
performance of all equities trading on the Ghana financial commitments to SMEs by providing
Stock Exchange. Over the past ten years, the GSE- credit and equity financing to funding vehicles.
CI has had its highs and lows - registering a return Although VCTF has leveraged its seed capital
of 79% in 2013 and –15.3% in 2016. The volatile of GH¢22.4 million by about three-fold, the
nature of the market coupled with lack of adequate huge SME demand makes its impact on SME
knowledge of the equity market has over the years development negligible. The Trust Fund does
driven many investors to largely focus on investing receive inflows from government, but the amount
permanently in fixed income, thus shrinking the is relatively small to make a dent in SME financing.
equity investor base. By its very nature, the venture capital and private
equity models are relatively long-term, robust
47. As part of a strategy to increase the number of and effective approach to easing access to long-
listings, the GSE launched the Ghana Alternative term capital and spurring business growth. It will
Exchange (GAX) in 2013 as a parallel market to require significant long-term commitment from
target Small and Medium-sized Enterprises (SMEs) the government and the private sector to ensure
with potential for growth. This is in line with a consistent flow of investable funds to maintain
broader trend in Africa with Nigeria, Egypt and sustainability.
Morocco all establishing similar markets in recent

49. As at the end of 2017, there were eighty-six CAPITAL MARKET INSTRUMENTS - DEMAND
(86) entities in which government has equity
investments. State Owned Enterprises (SOEs)
50. Pension funds and the life insurance industry
constitute a significant portion of the public
are areas of potential demand and
finances and control more than
growth for the capital market. Both
50% of national assets, therefore
the pensions and life insurance
have important roles to play in
industry are growing at faster rates
the development of the market.
than the real sector of the economy.
Unfortunately, of the 38 listed
companies, only six are state- Total assets However, the flow of funds from
the pensions and life insurance
owned: GCB Bank, ADB Bank, under into the capital market leaves
State Insurance Company (SIC), management of much to be desired. The 2017-2019
Cocoa Processing Company
(CPC), Produce Buying Company
pension funds resolution of banks, savings and
stood at GH¢ loans and finance houses which
(PBC) and Ghana Oil Company
served as fixed-deposit issuers has
(GOIL). In several jurisdictions 26.3 billion in exacerbated flight to safety, with
where the capital market has
developed significantly, SOE
2019. Until the more Fund Managers allocating
implementation increasing proportions of their
listings have spearheaded the
portfolios to government securities.
development of the equity-market. of the Pensions
SOEs can often be brought to a Act (2008) in
capital market by government
as a stage of their corporate 2010, pensions
development, and as a contribution were managed PENSION FUNDS
towards the development of the solely by the
capital market. This is usually done
after significant work to clarify Social Security 51. Total assets under management
of pension funds stood at GH¢
their mandates and to embed and and National 26.3 billion in 2019. Until the
protect high standard practices of Insurance Trust implementation of the Pensions
accounting and governance. SOEs
that are attractive to investors
(SSNIT). Act (2008) in 2010, pensions were
managed solely by the Social
may then come to the corporate
Security and National Insurance
bond market, with or without a
Trust (SSNIT) which administered
guarantee from the state, or to the
a defined benefit scheme. As at
equities market (if the state is looking for partial or the end of 2019, it was managing GH¢8.9 billion
complete privatization). Because of their size and representing 33.8% of total pension assets. The
name-recognition, these SOEs can often become Trust is the largest single institutional investor on
important cornerstones of a market. the Ghana Stock Exchange (GSE) and the main

SSNIT currently holds a significant number of shares listed

on the GSE with twenty-two (22) out of the thirty-seven (37)
listed companies. SSNIT’s holdings on the Ghana Stock
Exchange was GH¢2.7 billion as at June 2018.
driver of the development of the Capital Market 54. In 2016, the National Pensions Regulatory
in Ghana. SSNIT currently holds a significant Authority (NPRA )revised its investment guidelines
number of shares listed on the GSE with twenty-two which increased the allocation to a number of the
(22) out of the thirty-seven (37) listed companies. capital market products. The revision introduced
SSNIT’s holdings on the Ghana Stock Exchange new asset classes and increased the investment
was GH¢2.7 billion as at June 2018. limits for asset classes aligned to the capital market.
The limits for equities increased from 10 percent
52. Following the pension reforms of 2010 based on to 20 percent, while alternative investments (real
Act 766, private pension schemes were created with estate investment trusts, private equity funds and
licensed trustees, pension Fund Managers, and international investment securities) were also
pension fund custodians all under the supervisory introduced.
oversight of the National Pensions Regulatory
Authority. These new players have responsibility 55. The asset allocation of SSNIT and the private
for the Tiers 2 and 3 of employee contributions. pensions as at December 2019, are shown in
Figures 13 and 14. The asset allocation of the
53. Pension funds are recognised internationally private pension schemes are concentrated in
as one of the main drivers of deep, vibrant, liquid government securities and fixed deposits (about
capital markets by creating demand for capital 86 percent) as the Trustees seek safer investments
markets products. due to the current financial upheaval.
FIGURE 14: PERCENTAGE OF TOTAL ASSET ALLOCATION OF SSNIT - DEC 2019
OTHER ASSETS 9.57
LOANS 6.97
FIXED DEPOSITS 0.1
CORPORATE BONDS 1.85
REIT 0
GoG BONDS 6.04
UNLISTED EQUITIES 26.14
LISTED EQUITIES 23.13
INVESTMENTS IN SUBSIDIARIES 0.59
INVESTMENT PROPERTIES 19.97
INTANGIBLE ASSETS-COMPUTER SOFTWARE 0.28
PROPERTY, PLANT & EQUIPMENT 5.35

FIGURE 15: ASSET ALLOCATION OF PRIVATE PENSION FUNDS: DEC 2019
PERCENTAGE ALLOCATION
ALTERNATIVE INVESTMENTS 2.03%
ORDINARY SHARES/NON REDEEMABLE PREFERENCE

SHARES 1.93%
COLLECTIVE INVESTMENT SCHEMES 2.37%
BANK SECURITIES AND OTHER MARKET SECURITIES 12.35%
CORPORATE DEBT SECURITIES 3.26%
LOCAL GOVERNMENT AND STATUTORY AGENCY SECURITIES 10.98%
GoG SECURITIES 67.09%
LIFE INSURANCE COMPANIES 58. The National Insurance Commission (NIC)

does not regulate requirements or limits on asset
56. Life insurance companies in Ghana have seen allocation but instead requires each life company
significant growth over recent years with the total to develop its own investment policy. The riskiness
life premium reaching GH¢1.65 billion in 2019 of different positions is then addressed through
from GH¢580.6 million in 2014 representing a its guidelines on the solvency framework. The
compound annual growth rate of 23.2% during existing guidelines set out risk-based discounts to
the period. In spite of this growth, insurance be applied to different types of assets, including
penetration is relatively low at under 2%. Total discounts of 0% for government bonds, 5 percent
assets of life and non-life insurance companies for corporate bonds, 15% for listed securities (other
amounted to GHC 6.5 billion in 2019, representing than bonds, which are covered by the five percent),
1.9% of 2019 GDP. Figure 16 summarizes their and 30% for other, non-listed securities. As such
investment portfolio allocation. the NIC guidelines do not create any obstacle to
investments in the Capital Market rather, they
57. Life insurance companies are usually key promote them. The NIC is however conscious that
investors in a country’s capital markets, especially the development of the Capital Market provides an
in longer-term securities such as equities and opportunity to improve the instruments available
long-term bonds (in order to meet their own long- to the regulated insurance companies for risk
term obligations). However, the life insurance management and for the generation of returns.
companies are not yet significant investors in the
Ghanaian Capital Market. At present they have 59. The ability of the NIC to set out mandatory
invested primarily in government bonds and in regulations is limited by the present Insurance
fixed deposits, including deposits at banks, savings Act 2006 and the industry is awaiting the passage
and loans and MFIs. Only 7 percent of holdings of a new Insurance Bill into law. Under that new
were invested in equities, and no significant framework, the NIC will be able to issue mandatory
amount is invested in corporate bonds. regulations covering among other things, a fuller
risk-based capital framework.

FIGURE 16: INVESTMENT PORTFOLIO OF LIFE & NON-LIFE INSURANCE
Insurance Portfolio Allocation - 2019 Insurance Portfolio Allocation - 2018
24% 23%
Property & Land Investments
GoG Securities
3% 3%
Investments in Associates
Investments in Associates
28%
Property & Land Investments
17%
GoG Securities
9% 44%
Fixed Deposits
Other Securities
4% 1%
Listed Equity Corporate Debt
1%
MutualFunds 1%
Mutual Funds
2%
Corporate Debt 5%
29%
Listed Equity
Fixed Deposits
6%
Other Securities
Table 3: Number of licensees as at close of 2019

ASSET MANAGEMENT INDUSTRY
Number of
60. The Asset Management Industry in Ghana has License Category
Licensees
experienced remarkable growth especially over
Fund Managers 85
the past five years. The funds under management
have increased from GH¢ 20.1 billion in December Mutual Funds 43
2016 to GH¢ 28.3 billion by December 2019. Unit Trusts 21
Trustees 5
In Ghana, the Asset Management Industry Custodians 19
comprises of Fund Managers managing retail
Venture Capital 2
and institutional portfolios, Pension Funds and
TOTAL 175
Collective Investment Schemes (consisting of
Mutual Funds and Unit Trusts). The total number
of Fund Managers as at the end of 2019 was 85 Unit Trusts and Mutual Funds Regulations, L.I.
overall. Table 3 indicates the total number of 1695. The relatively low amount required to invest
licensees as at close of year 2019 in the Asset in collective investment schemes is making it
Management Industry. possible for retail clients to participate indirectly
in investment instruments including long-term
investments that were previously out of their reach.
COLLECTIVE INVESTMENT SCHEMES (CIS)
Pension Funds and Insurance companies could
61. Collective Investment Schemes in Ghana take invest more in Collective Investment Schemes
the form of either a Mutual Fund or a Unit Trust. but are restricted in terms of asset allocation
The characteristics of Collective Investment stipulated by their regulatory authorities. The key
Schemes in Ghana are provided for in the impediments to the growth of CIS are the lack
Securities Industry Act 2016, Act 929 and in the of adequate knowledge of Collective Investment

Schemes by the investing public and high interest competitive nature of the investment industry
rate regime. drove many Fund Managers to offer relatively
high guaranteed returns to investors in order to
62. Despite the growth experienced in the industry, increase their assets under management. The Fund
some key challenges have emerged including Managers invested in short-term fixed deposits
the growing levels of impaired assets due to the of Savings and Loans, Finance Houses and
collapse of several financial institutions, especially Microfinance institutions which offered very high
for funds being managed on a discretionary basis. interest rates. Unfortunately, the Fund Managers
This led to a clean up of the Asset Management could not redeem their investments as many of
industry, resulting in 50 Fund Management firms these institutions had liquidity issues resulting
having their operating licenses revoked. The in many Fund Managers carrying high levels of
cleanup exercise was in line with the Commission’s impaired assets. This has brought about loss of
mandate of protecting investors and the integrity confidence in the investment industry with some
of the industry. The rollout of a Government bailout retail investors now turning to safer government
on the back of the clean up is expected to prop the securities and others investing in physical assets
confidence of investors in the Asset Management such as land, buildings, etc.
Industry.
FOREIGN INVESTORS
INDIVIDUAL DOMESTIC INVESTORS 66. Foreign investors have played a significant
63. The participation level of Ghanaian individual role in the development of the capital market by
investors in the capital market is low. As at the end creating demand for longer-dated government
of 2019, there were 1,122,778 depository accounts, securities and equities. Available data from the
representing a CAGR of 11.5% from 2014 levels of Central Securities Depositary (CSD) shows that
647,212. This represents 3.7% of the population of the total value of foreign investor holdings in
Ghana. Individuals with investment management government securities in 2019 amounted to about
accounts were 503,177, representing 1.7% of the GH¢29.1 billion, representing 34% of government
population. There is therefore significant room for securities.
growth in promoting retail investment products.
67. In terms of trend, foreign investors’ holdings in
64. Key factors in the low level of participation government securities have been increasing over
include low income levels and limited exposure recent years, with the exception of the latter part
to financial education. As adoption of mobile of 2018 and early 2019. The 2019 divestment of
money exceeds the use of the banking sector due securities coincided with plans by the US Federal
to its inclusive nature, it is critical for the capital Reserve to raise its interest rates, which was
markets to leverage mobile technology to increase expected to hold back huge inflows to emerging
distribution and information dissemination. economies – foreign investors sold about 5 % of
their aggregate securities. The decline in foreign
65. There is a strong need
for broad investor education
to enhance appreciation of
investments in the general
populace. The level of
awareness is low given the
recent experience of investors
expecting fixed returns
from Fund Managers. Retail
investors have often typically
demanded guaranteed returns
which are about 5 to 10%
above yields on government
securities. The highly

holdings is not expected to be reversed important to note that this

anytime soon. The government is now concession expires on 31
turning to local investors to raise December 2021.
funding for the budget deficit.
Under a • Under a separate concession,
concession there is also no tax charged
TAXATION & THE CAPITAL MARKETS
on interest or capital gains
first granted earned from investments
68. In any financial environment, the
tax framework can have significant in 2005, there in government bonds. This
concession is not set to expire.
implications for the development of is no tax
the capital market. The administration charged on • For listed investments,
of tax can be used, among other the regime applies a final
things, to serve as incentives to attract
capital gains withholding tax on dividends
participation in the capital market or earned from of 8%. It also applies a
become a deterrent. The tax regime in investments withholding tax of eight
Ghana in so far as it relates to capital percent for interest paid to
markets is as follows:
in listed corporations, although this is a
securities, both tax credit to be used in the year
end declaration rather than a
• Corporate Tax is 25 % of profits, shares and final tax. No withholding tax
with some exemptions applicable.
Listed companies pay the same bonds. It is is applied to interest payments
corporate tax as other companies. important to to individuals, including
There used to be a concession that interest from bonds and from
during the first three years after
note that this bank deposits.
listing, a company would enjoy a concession • Note that the current
concessions mean that there
3% reduction to 22%, but this was expires on should be no issue created by
removed in 2015. Reinstating this
as a permanent feature should 31 December taxation for repo transactions
in relation to interest paid while
be considered since listed firms 2021. a security is still being held as
share their profits with a larger
range of investors including collateral (under the terms of
pension funds. repos, the two parties have to
make an equivalent payment
• Under a concession first granted of this interest between them
in 2005, there is no tax charged in order to “make good” the
on capital gains earned from original holder of the bonds.
investments in listed securities, This payment is referred to as
both shares and bonds. It is “manufactured interest”).

69. The tax benefits for investors in Ghana are GFIM. GFIM uses the Bloomberg platform
therefore impressive, but they are due to expire for trades of its listed fixed income securities
in December 2021. The end of these concessions market for the global investment community.
could have a significant negative implication for
capital market development as it would mean • In addition to the operations of the markets,
that listed investments were treated equivalently the Exchange also provides services by
way of: Securities Courses, Professional
to non-listed investments. Lifting the concession
Development Seminars and the sale of
could also cause problems for repo transactions capital market data. The training function
based on corporate bonds, which could be an is expected to migrate to the Ghana
additional impediment to development of the Investments and Securities Institute (GISI)
bond market. in 2020.
70. It is important to note that there are no • The Ghana Stock Exchange (GSE) also
significant enduring tax benefits for issuers in has an ownership interest in the Central
Ghana. Tax reliefs and preferential policies can Securities Depository (CSD) and the Ghana
be particularly important if the country is to Investments and Securities Institute (GISI).
attract more issuers to the market. The decision
to list is made principally by an issuer’s board and GHANA COMMODITY EXCHANGE
financial team, for whom listing means extra costs
(in compliance, in governance, in publication, 72. Although the Ghana Commodities Exchange
as well as the efforts required to maintain high (GCX) was established as a private company
quality accounting records and transparency). Tax limited by shares and structured as a Public-Private
incentives can help to soften the impact of those Partnership, the government of Ghana currently is
extra costs. In an environment such as Ghana the sole shareholder.
where there are potential difficulties in finding The government however intends to reduce its
an acceptable price for corporate bonds, these holdings over time. GCX operates an electronic
incentives can also give issuers some additional platform for buyers and sellers of agricultural and
flexibility. other commodities to trade in an efficient and
orderly manner under the regulation of the SEC.
The aim of the Exchange is to establish linkages
CAPITAL MARKET INSTRUMENTS - between agricultural and commodity producers
INFRASTRUCTURE and buyers, to secure competitive prices for their
products, assuring the market quantity and quality
GHANA STOCK EXCHANGE AND THE as well as timely settlement of their trades. It has
GHANA FIXED INCOME MARKET the vision of transforming Ghana’s economy by
71. The Exchange currently has three markets

which provide the following services:
• Main Equity Board – facilitates the listing

and trading of equities, preferences shares, As at the end
exchange traded funds (ETFs) and similar
securities by issuers, large and small.
of March 2019,
aggregate volumes
• Ghana Alternative Market (GAX) – a new
market segment for start-ups, Small and
of trade on GCX
Medium-sized Enterprises (SMEs) and those stood at 277,395
with the potential for growth.
metric tons,
• Ghana Fixed Income Market (GFIM) – equivalent to
GFIM was established to scale up the listing
and trading of fixed-income securities. All GH¢370,000.
fixed-income securities are now traded on

creating prosperity for all in commodity value

REGULATORY FRAMEWORK AND
chains, and become a regional and global trading
CHALLENGES
hub for all commodities.
75. The Securities and Exchange Commission
73. The Exchange became operational in (SEC), established in 1993, is the primary regulator
November 2018 with maize (white and yellow) as of the securities industry. Its mandate is set out
the main commodity. Currently, the Exchange is in the Securities Industry Act, 2016 (Act 929), to
dealing with spot trading and will phase in futures regulate and promote the growth and development
and other derivatives contracts in due course. As at of an efficient, fair and transparent securities
the end of March 2019, aggregate volumes of trade market in which investors and the integrity of the
on GCX stood at 277,395 metric tons, equivalent market are protected. Clearly, investor protection
to GH¢370,000. The GCX model is backed by has been coupled with market development in
a warehouse receipts system although it is yet what is expected from SEC. Act 929 was introduced
to complete its plan to build eight warehouses (to replace
that would enable
farmers to have the Securities
easier access to Industry Law
the platform. GCX 1993, (PNDCL
trades in white and 333), amended in
yellow maize, soya 2000) and reflects
GCX
beans, sorghum, the expanded
sesame seeds and nature of Ghana’s
rice. A total of 51,296 securities market.
farmers have been The Act allows
trained directly the introduction
or indirectly and of some new
20 farmer-based Ghana Commodity Exchange products and
organizations have services into the
signed up with the securities market
GCX. and brings new
market operators
under the
regulation of the
Commission.
CENTRAL SECURITIES DEPOSITORY
74. The Central Securities Depository (CSD) serves 76. The SEC is responsible for the oversight of the
as the single depository for all securities including activities of all securities companies. Act 929 sets
public sector bonds and private sector bonds its responsibilities out as follows (summarized):
and shares. It provides safe, secure, dependable
• Maintain surveillance over activities
clearing, settlement and depository services to
Ghana’s securities market. It has upgraded its in securities to ensure orderly, fair and
equitable dealings
system with a highly advanced platform that
directly connects to GSE’s trading system and • Register, license, authorize or regulate
BoG’s real time gross settlement system for the establishment of securities exchanges,
straight-through processing of transactions. The commodities and futures exchanges,
system is also connected to brokers, custodians securities depositories, clearing and
and registrars and keeps all securities for an settlement institutions, credit rating
investor in a single account. In due course, these agencies, Fund Managers, investment
systems should facilitate the development of new advisers, unit trusts, mutual funds, private
services and products including derivatives and equity funds, venture capital funds,
securities borrowing and lending. nominees, underwriters, issuing houses,
registrars, custodians, trustees, primary

dealers, broker-dealers; (iv) Central Securities Depository Act 2007

(Act 733) – the Act that provides for the
• Formulate principles for the guidance of the establishment of the Central Securities
industry; Depository.
• Monitor the solvency of license holders and (v) Foreign Exchange Act 2006 (Act 723) –
take measures to protect the interest of the Act that removed restrictions on foreign
customers where the solvency of a license and non-resident investors, including the
holder is in doubt; and limits and requirement for prior approval of
purchases.
• Advise the Minister on matters relating to
the securities industry. 78. The SEC is subject to a number of significant
regulatory challenges
77. The key legislations that are relevant in the
regulation of the securities industry includes the (a) Since 2016, SEC has been financially self-
following: sufficient, relying only on industry fees, which
is listed as one of its funding sources by the
(i) Securities Industry Act, 2016 (Act 929) - Act 929. However, its financial resources are
the primary legislation for the regulation of limited, thus, hindering its ability to function
the securities market. effectively. If the Government seeks to have
a well-functioning capital market, it will
(ii) Securities and Exchange Commission need a SEC that has the human and financial
Regulations, 2003 (LI 1728) - the detailed resources to develop it and to oversee it. The
regulations for the market operators and Commission needs to be resourced to be able
for the disclosure of information by issuers to execute its functions properly.
of public offer securities. The Regulations
were amended with segments to be replaced Headcount is at present 62 persons, which is
by Licensing Guidelines and Conduct of low given the range and number of activities
Business Guidelines. and entities under its supervision. The Public
(iii) Unit Trusts and Mutual Funds Regulations Services Commission conducted a human
2001 (LI 1695) - the detailed regulations resource establishment audit of the SEC in
for the operation of collective investment 2018 and recommended a staffing level of
schemes (unit trusts and mutual funds) under 118 persons. However, the existing financial
the Securities Industry Act. constraints means that it will be a challenge to

recruit persons with expertise and knowledge demanding conduct and capital requirements
of the capital markets. in order to protect clients.
(b) The SEC has powers under Act 929 but (e) The regulatory framework is currently
these are highly limited. They are unable implemented manually, resulting in
to conduct certain enforcement actions significant time lags in enforcement
without going first through the courts. There actions and risk assessment of segments
is the need for a review to ensure that there of the industry. The compliance-based
are adequate powers to act promptly while framework is paper based and analysis of
limiting the damaging effects of unauthorized returns and queries is slow with potential for
or delinquent firms’ actions on investor inaccuracies. The Commission has developed
interests. Moreover, the fines for infringement an IT strategy that envisages a three-pronged
are fixed, regardless of the intention, the scale approach to digitization: (i) automation of
of the breach or the numbers and types of internal processes, (ii) digitizing interactions
clients that were impacted. Further, these with market operators, (iii) making data
fixed fines are extremely low and therefore do available to the public on a timely basis.
not serve as a sufficient deterrent. They are Implementation is expected to commence in
usually between 150 and 2020.
500 penalty units, with
the highest penalty being (f) Act 929 does not have
4,500 penalty units (a Since 2016, SEC has a resolution framework for
penalty unit is currently market operators following
GH¢12). been financially the revocation of licenses.
self-sufficient, relying This leaves a gap in the
(c) Collective Investment powers of the Commission
Schemes are the classic
only on industry in its mandate of protecting
tool for channeling the fees, which is listed investors. It is critical that the
savings of retail investors as one of its funding law be amended to enhance
to the capital markets, but the Commissions powers
the dual legal framework sources by the Act in this regard, along with
of mutual funds and 929. However, its intermediate steps to limit
unit trusts for CISs is damage to market confidence
creating governance financial resources when operators begin to fail.
loopholes and without are limited, thus,
uniform standards on hindering its ability
performance reporting.
With the current to function effectively.
regulations on Unit
trusts, the fiduciary
duties that trustees have
for their clients are not clearly set out.
(d) The licensing regime requires streamlining.

A draft framework has been finalized pending
issuance. The current regime for Fund
Managers includes relatively low minimum
capital requirements (GH¢ 100,000) and
limited conduct guidelines which are being
enhanced. Fund Managers are able to handle
client monies and assets directly and to invest
discretionally. At present they are able (i) to
create and administer collective investment
schemes as well as client portfolios, and (ii)
to apply to become Pension Fund Managers.
Those roles are usually subject to very

07. Developing the Capital
Market Master Plan
VISION FOR THE

• A market capable of efficiently
CAPITAL MARKET
allocating resources to the
productive sectors of the
79. A plan must be guided
economy for accelerated
by a vision. economic growth.
To put in place the
framework for the capital market • Achieve sustainable
development plan will mean development growth through
crafting a clear vision which will the proper matching of The vision
form the basis for setting objectives, funding to projects.
developing actions and initiatives. articulates the
The vision articulates the • The activities of the market
aspirations of many stakeholders will create a strong investment aspirations
of the market so that the plan can environment or climate which
will lead to creating jobs in
of many
receive the support of the market.
Following broad consultations
the economy and ultimately stakeholders of
reducing poverty.
with stakeholders, the expectation the market so
of the market is that the plan will
articulate a vision which will
• A market that is dynamic,
proactive and innovative in
that the plan
embody the following aspirations: developing new products for can receive the
the market.
• Develop a strong capital support of the
market premised on a robust • A market which exudes market.
and modern infrastructure confidence and transparent
with state-of-the-art enough to allow players take
technology support. informed decisions.
• Achieve an emerging market • A market which creates value

status from the current frontier for its investors and other
market ranking. players on the market.
• A capital market which is able • Make Ghana the Financial

to mobilize and attract huge Hub for West Africa.
volumes of funding both from
domestic and international
investors.

The following have been set up as the four main

80. Based on the above aspirations, the following strategic pillars to drive the vision:
vision has been crafted:
Strategic Pillar 1
A deep, efficient, diversified and well-regulated capital Improving diversity of investment products
market with a full range of products attractive to domestic and liquidity of securities market
and international investors. The sophistication and breadth in the range
of products and offerings must be vastly
81. At the end of the plan period, it is anticipated that expanded with the end goal of bringing about
the capital market in Ghana will be demonstrably full market diversification, financial inclusion
successful and well-functioning: and market relevant products innovation
and development. The Commission needs to
The market will be firmly established as an have adequate human and financial resources
emerging market, with a commitment of all to support and drive the introduction of new
participants to further improvement and to the investment products as well as education on
implementation of international standards of same. This strategic pillar is aimed at creating
regulation and of infrastructure; a range of products and services that will be
attractive to local and foreign investors.
• It will offer a wide range of investment
opportunities, including different sectors
Strategic Pillar 2
and different types of instruments; key
instruments will be liquid; price discovery Increasing the investor base
will be efficient and effective; The goal of expanding the investor base is
to encourage the development of investors
• It
will facilitate a significant mobilization of that have different investment objectives and
resources towards promising opportunities employ a range of investment strategies. This
and businesses, thereby boosting economic will enhance market liquidity by creating
growth, creating lasting jobs, and supporting trading opportunities and will reduce market
the financial stability of the country;
fluctuations by allowing securities exhibiting
• It will be one of the main channels for different investment risks to be held by those
financing innovation and entrepreneurship most capable of bearing them. It is not only
in the country; and the size of the investor base that matters but
also its diversity. An investor base can be large,
• It will be one of the main options for domestic but if it is concentrated in a small number of
investors to put their long-term savings, and institutions employing similar investment
will attract significant regional and overseas strategies, the result may be “buy-and-hold”
investment. portfolios that ultimately undermine the
efficiency and effectiveness of the capital
•Provide long-term funding to support the market. A broad and diversified investor
realization of the ideals in the Medium Term base provides a source of stable demand that
National Development Policy Framework and
supports liquidity, depth and stability.
the Ghana Beyond Aid Strategy Document.
Strategic Pillar 3
Strengthening infrastructure and improving
market services
KEY STRATEGIC PILLARS Financial Market Infrastructures (FMIs) provide
critical services that facilitate the clearing,
82. To achieve the vision and objectives of the settlement and recording of financial transactions,
capital market development plan, the vision needs including the transfer of securities and funds. By
to be translated into a set of well-focused strategic making transactions safer and cheaper, robust and
pillars based on the weaknesses identified efficient, market infrastructure can boost trading
during the scoping study of the capital market. liquidity. Much progress has been made regarding

establishing the requisite market infrastructure. represent a relatively safe haven for individual
However, there is still more room for improvement and corporate investors who only currently
and enhancement. have access to T-Bills. This will be dependent
on a range of matters including the creation
Strategic Pillar 4 of easy access to trading and custody of
government bonds by persons who are not
Improving regulation, enforcement and CSD participants, a decision by the issuer
market confidence deliberately to direct part of issuance of
Development of the capital market is benchmark bonds to retail investors as well
dependent on the level of confidence of as to make any necessary structural changes,
investors and other key actors in the market and on the promotion of these bonds to the
and on the credibility of the legal and retail sector.
regulatory framework that underpins this
confidence. This Pillar combines initiatives • Corporate Bonds - through the creation of
a wholesale bond market available only
to fortify the understanding of markets and
to qualified investors. The market would
products of the stakeholders, with initiatives incorporate a fast route to issuance and a
to build safety, soundness and stability limited content offering document. Even with
within the markets. The legal and regulatory Wholesale bonds in place, the corporate bond
framework for capital markets will be reviewed market is expected to remain a relatively quiet
and improved to give more powers to the SEC market until the issuance of medium-term
in the area of enforcement, to ease issuance of bonds by banks is facilitated and encouraged
securities, enhance time to market and to allow – something that has proven internationally
for innovation and product development. to be one of the main tools that banks
Enforcement of the AML/CFT guidelines have used for the management of maturity
that were issued in 2019 is also of critical mismatch risks in their balance sheets. It is
importance. common to find that in active bond markets,
banks are usually responsible for over half of
all issuance of bonds.
DELIVERING GROWTH • Collective Investment Schemes - these are
important vehicles for encouraging and
83. The specific initiatives within each of the pillars safeguarding retail investment, providing a
are described below and are aimed at constructing way for retail investors to enjoy economies of
markets across a wide range of areas. Subject to scale, diversification, expert intermediation
addressing several important precursors described and advice, and access to institutional
below, the initial areas of growth are expected to instruments; and important investors for
fall into the following four areas: issuers to consider. The proposed way
• Retail access to government bonds – this would forward is a restructuring of the Collective

Investment Schemes (CIS)

structures available now
and a promotion of CISs
over individual portfolio
accounts.
• Listings of shares – once the

GSE is successful in its
demutualization and in
its effort to attract more
equity listings, this will add
significant cornerstones to
the equity market, which
will be natural points of
attraction for investor
attention and liquidity.
Initiating the business
development unit to create an incubator for 86. Of course, as mentioned above, delivery of
SOEs and SMEs is also critical for deepening these quick wins and of this initial growth will
the pipeline for listings. be dependent on the resolution of a number of
matters, or at least their being put firmly on a path
84. The Commission and stakeholders will to resolution. These include the following:
also prioritize initiatives that would have an
early impact and serve as a powerful signal of • resolution of impaired assets within client
confidence and intent (referred to as “quick wins”). portfolio accounts of Fund Managers,
These initiatives should be relatively quick and
straightforward and should be easily grasped • addressing dysfunctions within the
by the investing public, in order to have the government bond markets,
greatest influence on the awareness of progress.
• enhancing the financial resources of the
Recommended initiatives for consideration as
SEC,
quick wins include the following:
• increasing the human capacity and
– demutualization of the GSE and increasing technological backbone of the SEC, and
listings
– retail access to government bonds • implementing detailed conduct regulations.
– introduction of repo markets
– introduction of REITS
– launch of a credit rating agency and related
guidelines; and ADDRESSING FINTECH
– restructuring and promotion of CISs
87. Financial Technology companies (Fintech)
85. Properly done, it is a specific aim of this have championed technological innovation across
Master Plan’s implementation to result in the the globe, allowing services and products to be
reclassification of Ghana’s capital market into delivered and used in new ways, often creating
the investable indices for Emerging Markets, in significant disruption for existing networks and
particular the FTSE Russell and MSCI index suites structures. They provide solutions that create
(Ghana is currently categorized as a Frontier access to new markets, new offerings for existing
Market). To this end, the initiatives described below customers, deeper customer engagement, and
are directed towards creating the appropriate enhanced data collection, use and management.
conditions for liquidity, market efficiency, investor Fintech has already begun to have important
access, and institutional strength at the level of impacts in Ghana in a range of sectors, including
both firms and market institutions. agriculture, health and importantly retail financial
services (for example, mPedigree, Slidepay, and

MTN mobile money). Fintech mobile internet • Regulatory Sandbox – a regulatory framework
solutions in Ghana have contributed significantly to be created by SEC for piloting innovative
to digital banking, made remittances and transfers proposals and determining their impact and the
faster and safer, helped to bridge the gap between appropriate regulatory approach within a safe
banks and customers and revolutionised product space. This partnership will make it easy for the
development. regulator to deal adequately with associated risks
such as the use, analysis and sale of customer data
88. The Capital Market value chain offers many and increased systemic vulnerabilities.
opportunities for technological innovation with
the potential to revolutionise the market in a range • Create digital platforms for retail trading – a
of areas, including: core market infrastructure, post specific initiative to seek to incorporate within
trade operations, analytics and decision making, the capital markets the best practices and lessons
funding platforms and new products. To deliver the learned from the application of Fintech in other
needed solutions, the capital market must create sectors, particularly digital banking.
the room for mutually beneficial partnerships with
Fintech firms. A functional partnership will help • Capital Market Fintech Meeting – quarterly/semi-
Fintechs to create and scale the right innovations annual meetings coordinated by SEC attended
for the Ghanaian market, improving product by GSE, CSD, selected market participants and
offerings, increase efficiency and lowering costs Fintech companies in Ghana to discuss market
for market participants. needs and opportunities and regulatory obstacles
to technological development within the market.
89. To help promote these developments, this
Plan includes three initiatives specifically aimed
at helping create this partnership between the STRATEGIC INITIATIVES
market and the Fintech providers:
90. The strategic initiatives are the means through
which the vision will be translated into practice.
The following are the strategic initiatives for each
strategic pillar:
Pillar 1
1. IMPROVING DIVERSITY OF INVESTMENT PRODUCTS AND LIQUIDITY OF
SECURITIES MARKET
Investment products - Specific Strategic Initiatives
a) Comprehensive review of taxation issues applicable to the n) Establish credit rating agency
capital market 0) Promote the development of REITs
b) Revise market models and introduce market makers p) Amend regulation on Tier 2 capital
c) Make credit ratings mandatory q) Develop a framework to bring about transparent
d) Develop wholesale corporate bond framework environment for the issuance of infrastructure bonds
e) Strengthen the repo market r) Facilitate retail access to government bonds
f) Create a listing business development unit at the GSE s) Establish incubation program for SOEs and SMEs
g) Clarify the definition of free float t) Introduce additional commodities at GCX
h) Facilitate the creation of limited partnerships u) Promote Private equity and venture capital investing
i) Permit margin trading v) Establish securities lending and borrowing, and short
j) Promote asset-backed securities selling
k) Review of readiness for commodity futures w) Facilitate the issuance of municipal bonds
l) Develop a framework for the issuance of infrastructural bonds x). Risk Capital funds
m) Improve liquidity of the government bond market y) Facilitate the issuance of green bonds

COMPREHENSIVE REVIEW OF TAXATION policy and financial stability. There is the need to
ISSUES APPLICABLE TO THE CAPITAL revise government’s issuance practices including
MARKET the definition of benchmarks and the use of
There is the need to identify appropriate measures liquidity management operations (including buy-
to make issuance attractive to issuers and backs and switches). As matching supply and
investors including taxation of private equity and demand for a debt market instrument becomes
venture capital funds. This should be part of a more challenging, the role of the Primary Dealers
larger exercise including incentives for investors. (PDs) should be enforced to provide liquidity to
It could include consideration of matters such as the secondary market. This will involve buying or
reductions in corporate taxes for listed companies selling financial instruments without an immediate
that have carried out IPOs of more than 25% of their matching transaction and it requires the PDs to
share capital; super-deduction of listing costs in the bear risks relating to the movement in inventories.
annual declarations, Enhanced capital
and amnesties requirements for
for taxes arising banks, savings &
from corporate loans institutions,
restructurings ahead broker-dealers and
of a listing. It will be Fund Managers will
important that this require them to hold
exercise balance the increased levels of
cost of taxes foregone risk-free assets on
against the utility their balance sheets.
to the state of the This will help boost
activity promoted, domestic trading of
and also ensure that government bonds.
any incentive is
commensurate with REVISE MARKET
the benefit it brings MODELS AND
to the economy. I N T R O DU C E
MARKET MAKERS
This is not simply There is the need to
a matter of identifying new incentives, but also define and implement appropriate market models
of identifying and resolving potential obstacles for GSE markets, including introducing effective
that may be difficult to spot in the absence of a market makers, subject to the right set of obligations
capital market, but which become critical once the and benefits, and other appropriate measures that
market tries to develop. This would also include will promote liquidity and price discovery. This
identifying and fixing existing incentives that are may include introducing market makers within
unnecessary or are open to abuse. International the GFIM government bond market. In this
experience in this area has highlighted a wealth context, the SEC’s enhanced capital requirements
of lessons. Activities to be undertaken will include for broker-dealers and the concurrent migration
identifying the tax issues relating to the capital to enhanced liquidity requirements based on
market and forwarding proposals to Ministry of asset risk will drive a review of business models.
Finance for consideration. In the medium-term, a risk-based capital regime
for securities firms will be essential to firms who
IMPROVE LIQUIDITY OF THE GOVERNMENT want to be market makers. There is also the need to
BOND MARKET open up primary dealership space to grant access
Liquidity is important for effective government to Fund Managers in the purchase of government
bond market functioning. It facilitates the efficient primary issues. This will make it easier for Fund
allocation of economic resources through the Managers to invest more in Treasury bills and
efficient allocation of capital and risk, the effective bonds.
generation and dissemination of issuer-specific
information, and the effectiveness of monetary

FACILITATE THE ESTABLISHMENT OF CREDIT the process which is equivalent to the issuance
RATING AGENCIES of shares. The creation of a fast-track wholesale
This initiative marks the launch of a functioning corporate bond framework, including template
credit rating agency, able to provide investors information memorandum, definition of eligible
with important information regarding the investors and automated listing process will help
creditworthiness of an issue or issuer. These credit remove obstacles to make it easier for potential
rating agencies help measure the quantitative and issuers to come to the market. A wholesale bond
qualitative risks of an issue and allow investors is a debt security, which at the time of issue, could
to make informed decisions by benefiting from be sold to only institutional clients. An active
the skills of professional risk assessment. It wholesale bond market would also provide a
is recommended that the use of a local credit platform for the initial development of mortgage-
rating agency be made mandatory for all banks backed securities. It would also enable regulators
and insurance companies, and issuers of bonds prepare a path for the creation of green bonds and
and syndicated loans held by Fund Managers, social bonds, which will help to deliver some of
Collective Investment Schemes and Pension Funds. the Ghana’s sustainable development goals. SEC
Implementation of the will develop separate
recommendation will guidelines for the
be by the SEC and issuance of wholesale
BoG in consultation and retail bonds.
with the market and
in line with the other AMEND
initiatives. REGULATION ON
TIER 2 CAPITAL FOR
PROMOTE THE BANKS
DEVELOPMENT OF Under the current
REITS regulatory regime of
Considering the fact the Bank of Ghana,
that Ghana has close the use of debt
to 2 million deficit in issuance by the banks
residential housing, is treated harshly for
REITs will serve as consideration as part
a good vehicle to pool funds for the provision of Tier 2 capital, making it unattractive for the
of housing to reduce this deficit and diversify banks to issue debt instruments. They are usually
the pool of capital available for growing the real key issuers of medium-term bonds. The standards
estate sector. To a Ghanaian investor, REITs will set out in Basel II would help to facilitate bank
serve both as a diversifier of a portfolio and access issuance and therefore create more products in the
to investments in residential and commercial market. This issue needs to be resolved through
properties. SEC has developed the guidelines for engagements with Bank of Ghana, the Ghana
the setting up of REITs but there is the need for Association of Bankers and the Securities and
active support for its issuance and specific training Exchange Commission in order to enable banks
programs for intermediaries and investors to use domestic funding to raise long-term capital for
promote its development and usage. productive projects.
DEVELOP WHOLESALE CORPORATE BOND STRENGTHEN THE REPO MARKET

FRAMEWORK Repo markets play a key role in facilitating the
The corporate bond market is at its rudimentary flow of cash and securities around the financial
stage with few listed bond issues. Some of the key system, with benefits to both financial and non-
challenges facing issuers include lack of clarity financial firms. A well-functioning repo market
on issuing guidelines and the rigorous nature of therefore supports liquidity in the capital markets,

will be exciting to investors,

have good growth prospects
or occupy important segments
of the economy. The GSE will
develop a framework that serves
as an incubator for the following
potential issuers:
1. State-Owned Enterprises
(SOEs): These firms are
often brought to a capital
market by a government as
a stage of their corporate
development, and as a
contribution towards the
thus contributing to the efficient allocation of development of the capital market.

capital in the real economy. An introduction of a
master repo agreement including insolvency carve 2. Small & Medium-sized Enterprises (SMEs):
out and appropriate taxation framework and the There has to be greater coordination with
strengthening of CSD facilities for administration investment advisors in enhancing GAX and
will help strengthen the repo market. encouraging institutional investors to support
smaller businesses through the exchange.
FACILITATE RETAIL ACCESS TO GOVERNMENT 3. The incubation program can be created
BONDS to help professionalise and get them
The current process for retail investors to buy ready for bond listing, including any legal
and sell government bonds is cumbersome. changes necessary to facilitate their access
The process should be made simple by making to capital markets. Notwithstanding this
it easier for account opening, purchases and initiative for their professionalization, these
sales. In addition, there should be a sustained companies would still be covered by the GSE
public education on bonds and the need for the Business Development initiative described
government to consciously allocate portions of immediately above. The new GSE Business
benchmark issues for the retail investors. Development Unit should work with the State
Interest and Governance Authority (SIGA),
the Ministry of Trade and Industry, Ministry
CREATE A LISTING BUSINESS DEVELOPMENT
of Agriculture and the National Board for
UNIT AT THE GSE Small Scale Industries (NBSSI) to create the
The GSE has had low listings as its major set- incubation initiative.
back. As a way forward towards the resolution of
its listing problems, there is the need to create a CLARIFY THE DEFINITION OF FREE FLOAT
business development unit at the Ghana Stock The rationale for this initiative is to increase the
Exchange focused on marketing, education and minimum public float with the view to increase
other initiatives such as incubating SMEs, all liquidity, reduce market volatility and assist in
aimed at increasing listing on the exchange. The better price discovery. This initiative will involve
unit will identify target companies and prepare clarifying the definition of free float, restructuring
them for listing. An intermediate market for capital market indices to reflect it, and creating linkages
can also be explored by this unit in collaboration to ongoing free float requirements for listed
with the SEC. companies.
ESTABLISH INCUBATION PROGRAM FOR PROMOTE INVESTMENT IN PRIVATE EQUITY

STATE-OWNED ENTERPRISES & SMES AND VENTURE CAPITAL
Deepening the range of listings requires a targeted Private equity is an important force in financial
approach of engaging potential companies that markets, accounting for about $200 billion in

investment worldwide each year. But only 10% of Exchange is working on rules to allow margin
it reaches emerging markets and an insignificant trading. It is therefore necessary to create a
portion coming to Ghana. Promoting private holistic regulatory framework for margin trading
equity in Ghana will entail improving the legal including appropriate protections for the firm and
framework of venture capital and private equity for the clients. Training for the SEC and broker-
operations in Ghana and finding solutions to dealers should also precede and accompany the
the bottlenecks plaguing the sector. Some of the deployment of this initiative.
challenges include the corporate form of private
equity funds. Currently, Ghana does not have a FACILITATE THE ISSUANCE OF MUNICIPAL
limited-liability partnership structure. Thus private BONDS
equity funds have to be structured as companies The passage into law of the draft Local
limited by shares. This creates the following issues: Government Finance Bill, otherwise known as
(a) Taxation of management fees at the fund level the Municipal Finance Bill, to help cash-strapped
instead of at the general partner level, (b) Taxation districts and municipalities float municipal bonds
of the vehicle as a company instead of pass-through to raise private capital to finance infrastructural
tax treatment, and (c) Limited ability for payouts developments has stalled for several years. The
since standard companies cannot distribute in a aim of this initiative therefore is to address all the
way that impairs capital, which is not relevant in issues delaying the passage of the bill into law,
the case of a private equity fund. This will require address all legal impediments to the issuance of
working with the Attorney General, the Registrar- municipal bonds and offer assistance to capable
General, the Ghana Revenue Authority, and the municipalities to issue municipal bonds.
SEC to fashion a framework that enables private
equity and venture capital to thrive if Ghana is to PROMOTE ASSET-BACKED SECURITIES
become a financial hub for the sub region. The Ghana Stock Exchange is in the process of
developing new products such as asset-backed
ESTABLISH SECURITIES LENDING AND securities. Before these new products can come
BORROWING, AND SHORT SELLING to the market, a legal framework for asset-backed
The Ghana Stock Exchange is developing and mortgage-backed securities is necessary.
rules to allow securities lending and borrowing In addition, the creation and marketing of these
which will go a long way to improve liquidity products will also form part of the actions to be
and increase trading volumes. This calls for the undertaken under this initiative. There is currently
gradual introduction of facility for securities loans, one asset-backed security listed on the GSE.
supported by an appropriate legal framework.
The opening up of the ability to borrow securities RISK CAPITAL FUNDS
and to sell them short should proceed gradually, In due course, once the Fund Manager license
starting initially with (i) market makers only at regime is streamlined and the impaired assets
first and (ii) only the most liquid securities where within the fund management industry are resolved,
short positions can be closed relatively easily. the SEC will consider the creation of risk capital
funds to specialize in different areas, such as
PERMIT MARGIN TRADING infrastructure and unlisted equity, and dedicate part
Many markets have frameworks and guidelines of their portfolio to emerging, growth companies.
for margin trading which have benefits for These funds would need to be accompanied by a
market liquidity. Currently, the Ghana Stock carefully-constructed governance framework.

for the issuance of green bonds. Green bonds and

INTRODUCE ADDITIONAL COMMODITIES AT social bonds would increase the range of product
GCX AND INCREASE TRADING VOLUMES offerings in the market, while addressing important
Currently, the GCX is trading in 5 commodities environmental and social issues that have gained
– Maize, Soya Beans, Sorghum, Rice and Sesame. the attention of financial markets over the last
The GCX should work to increase the number two decades. A green bond is specifically issued
of commodities traded as well as grow trading to raise funds for climate and environmental
volumes systematically with the onboarding projects. A social bond is used to raise funds for
of additional members. Commodities such as social impact projects. Green bonds typically come
cashew, groundnut, and other tree crops can be with tax incentives to enhance their attractiveness
added gradually. The GCX should also explore to investors. Developing and implementing a
the feasibility of trading in Ghana’s main exports framework for the issuance of green bonds will be
- cocoa and gold, as is done in Ethiopia. Diversity key to this initiative.
of commodities traded on the Exchange will help
increase activity and also hasten the development DEVELOP A FRAMEWORK FOR THE ISSUANCE
of derivative products. OF INFRASTRUCTURAL BONDS
Challenges with Government’s ability to finance
REVIEW READINESS FOR COMMODITY infrastructure projects has created a significant
FUTURES infrastructure gap in the country. The aim of
Once liquidity and price formation on the this initiative is to enable the capital markets
existing and planned spot markets on the GCX to become a reliable source of financing for
have become consolidated, and participants are infrastructure projects in Ghana. Among the
satisfied with warehouse coverage and operations, initiatives to be undertaken will include a
the GCX, participants and the SEC will want dialogue between institutional investors and
to review the readiness of the market for the Ghana Infrastructure Investment Fund (GIIF),
creation and introduction of appropriate futures. working with GIIF to create an ongoing supply
Implementation will be carried out gradually in of investment opportunities, the creation of a
order to identify and resolve issues as they arise. repository of infrastructure project data and
This will ensure that instruments match the common performance measures, the training
needs of market actors, and that risks are properly of institutional investors by a consulting firm/
understood and addressed. university specialized in infrastructure and the
development of appropriate financial incentives
FACILITATE THE ISSUANCE OF GREEN BONDS (tax incentives, risk-transfer mechanisms such as
As a way to mitigate the effects of climate change first loss on investment, etc.).
and environmental degradation, a legal and
operational framework needs to be established
Pillar 2
2. INCREASING THE INVESTOR BASE
Investor Base - Specific Strategic Initiatives
• Promote collective investment schemes • Develop NPRA guidelines on pre-approved overseas investments
• Conduct training for pension fund trustees • Undertake insurance awareness program for the public
• Develop relationship with institutional investors overseas • Long-term incentivized savings schemes
• Undertake roadshows in key overseas investor cities • Create digital platforms for retail trading

PROMOTE COLLECTIVE INVESTMENT term goal like home ownership or retirement,

SCHEMES restrictions on early withdrawal, and a requirement
Collective Investment Schemes make it possible to have much of the savings invested in capital
for relatively small investors to obtain diversified instruments.
investment portfolios with professional
management at reasonable cost. The role of CIS CONDUCT TRAINING FOR PENSION FUND
is likely to grow in coming years, as increased TRUSTEES
responsibility is placed on the average citizen, as Rapid pension sector growth puts pressure
opposed to governments or companies, in meeting on service delivery, customers, and regulatory
critical needs such as education, retirement and aspects, which makes capacity building an urgent
health care. In this context, CISs can be used, priority. Unfortunately, there is limited skill set of
either alone or in combination with other forms of personnel working in the pensions sector. Pension
institutional savings, such as pension funds and fund trustees will need to refresh their knowledge
insurance products, to enable individuals to meet on investments. The NPRA and the SEC will
their financial planning goals. In Ghana, even collaborate to enhance knowledge of pension
though CIS assets have been rising sharply over industry practices.
the past five years, the number of investors relative
to other investment vehicles is low. Scaling up UNDERTAKE INSURANCE AWARENESS
the promotion of CISs will help attract individual PROGRAM FOR THE PUBLIC IN
portfolio funds. COLLABORATION WITH NIC
Ghana’s insurance sector is small with significant
SEEK NPRA CLARIFICATION OF GUIDELINES room for growth given its young population
ON PRE-APPROVED INTERNATIONAL structure. There is a general lack of public
INVESTMENTS awareness with little understanding of the purpose
The benefits of investing internationally cannot of insurance and a sense of mistrust of insurance
be overemphasized. Apart from providing foreign companies. The purpose of this initiative is to
currency-indexed real returns, and greater bring insurance awareness to the general public.
and cheaper leverage options, international Awareness of insurance products will help retail
investments help in diversifying risk within a investors manage personal risks better and increase
pension portfolio. This initiative seeks to enable their appreciation of capital markets. Furthermore,
international investments by creating criteria for the insurance sector is key to growing the capital
investment in high quality investments, effectively market as players can invest their insurance
pre-approved, so as to expand awareness of portfolio in capital market products.
trustees and Fund Managers. These criteria might
include for example pre-approval of sovereign DEVELOP RELATIONSHIPS WITH
bonds issued by OECD countries, or international INTERNATIONAL INSTITUTIONAL
investment grade securities listed on exchanges INVESTORS
whose regulators are full members of IOSCO. Foreign institutional investors constitute a
significant portion of the pool of investors in
LONG-TERM INCENTIVIZED SAVINGS Ghana. It is therefore imperative that a strong
SCHEMES relationship is developed in the form of creating
The SEC will work with Fund Managers and pension both access to reliable information on the market
funds to create appropriate new incentivized and to relevant officials of the regulator, SEC,
savings schemes for long-term investment. The with the aim of managing their expectations
schemes would in particular promote consistent and attracting inward investment. This initiative
investment by salaried persons and other retail will ensure that reforms and innovations are
investors while offering some tax advantages on adequately communicated to investors in a timely
gains. The incentives that apply to the schemes and accessible manner.
should be attached to conditions such as a long-

CREATE DIGITAL PLATFORMS FOR RETAIL UNDERTAKE ROADSHOWS IN KEY OVERSEAS

TRADING INVESTOR CITIES
Digital financial services in Ghana is still Potential foreign investors will benefit a lot in
developing and there is a huge opportunity for terms of getting the requisite information about
its rapid growth in the capital market. Ghana investment opportunities in Ghana. This calls for
lags behind other East African countries in a systematic development of a roadshow program
terms of digital financial services but has the to showcase new issues aimed at attracting
base conditions for digital financial services to inward investments from potential institutional
be successful. This initiative is aimed at using and individual investors by issuers with potential
digital platforms to improve services to individual regional appeal.
investors.
Pillar 3
3. STRENGTHENING INFRASTRUCTURE AND IMPROVING MARKET SERVICES
Infrastructure and Services - Specific Strategic Initiatives
• Speed up the process of GSE demutualization • Review processes at CSD
• Undertake a focused training program for professional • Fund the settlement guarantee fund
intermediaries
• Establish continuous professional education for intermediaries • Develop modern warehousing facilities
• Capital Market Fintech Meetings • Improve the distribution of market data and information
• Facilitate the establishment of currency trading platform • Facilitate the integration of West African Capital Market
• Utilize blockchain applications in financial service
SPEED UP THE PROCESS OF GSE resolution of any settlement delays and

DEMUTUALIZATION failures at CSD.
The Ghana Stock Exchange has already started
the demutualization process but the pace is slow. UNDERTAKE A FOCUSED TRAINING
The focus of this initiative is to hasten the process PROGRAM FOR PROFESSIONAL
of demutualization which is based on conversion INTERMEDIARIES
to a company that is strongly focused on business In spite of progress made in the development
development. of the capital market, a significant number
of professionals in the sector have received
REVIEW PROCESSES AT CSD minimal training beyond the entry-level courses
The aim of this initiative is to bring about efficiency provided by the GSE. As the markets grow, it
in the operations of the CSD and to help introduce will be important to ensure that mid-level and
new products that will benefit the capital market. senior professionals have the requisite skill and
understanding of the legal and regulatory regime
The actions to be taken will include: and related recent reforms to perform and grow
the industry. The recent collapse of many financial
• Review processes - to smooth out processes institutions attests to this fact. This calls for a
and facilitate risk management. “Big Push” focused training program for industry
professionals including ethical behavior and
• Removal of pre-validation controls -
to facilitate short-term trading and as proper conduct to bring all firms up to similar
preparation for other trading strategies such levels.
as market making and short selling.
• Introduction of buying-in and closing-out

regime – to support administration and

FUND THE SETTLEMENT GUARANTEE FUND their investment decisions, or at least as much as
Although the settlement guarantee fund has been their counterparts in the market. The GSE must
created at the CSD, it is not adequately funded. The review the way that data and announcements are
objective of this initiative is to fund the settlement distributed so as to ensure that the wide investor
guarantee fund in order to perform the following base that they wish to attract has proper access to
functions: this information. Key elements of this framework
• To meet default obligations, shortfalls, are:
deficiencies and or any other defaults during 1. Improve quality and flexibility of
clearing and settlement. information provided by SEC
• To enhance investors’ confidence in the 2. Establish a Financial Data Hub as part of
securities market of Ghana. this initiative to host financials of all public
• To guarantee that settlements for
companies,
Depository Participants are executed as
3. Complete digitization of SEC’s operations
scheduled.
CAPITAL MARKET FINTECH MEETING
ESTABLISH CONTINUOUS PROFESSIONAL
Ongoing communication between the capital
DEVELOPMENT (CPD) FOR INTERMEDIARIES
market sector and the Fintech companies will be
A well-crafted and delivered continuous
important if the introduction of innovation is to be
professional development scheme is important
promoted. This innovation will see the initiation
because it delivers benefits to the individual,
of regular meetings (quarterly or semi-annual, to
their profession and the public. CPD ensures that
be defined by members of the group), coordinated
capabilities keep pace with the current standards
by SEC, and attended by GSE, CSD, selected
of others in the same field. It helps maintain and
market participants and Fintech companies in
enhance the knowledge and skills needed to deliver
Ghana. The meetings will discuss market needs
a professional service to customers and clients.
and opportunities, as well as regulatory obstacles
The Ghana Investment and Securities Institute
to technological development within the market.
will lead in the development of a comprehensive
CPD framework that will be reviewed by the SEC
FACILITATE THE DEVELOPMENT OF MODERN
as requirements for senior management of market
WAREHOUSING FACILITIES FOR GCX
operators. This will ensure that professionals in
A well-developed commodities market in Ghana
the industry remain current with the regulatory
has the potential to revolutionize the agricultural
and operational landscape and also invest
sector which is the mainstay of the economy. As
adequately in human capital to drive innovation
part of its plans to deepen its warehouse receipt
and industry growth.
system to cover the whole span of commodities
available in Ghana and other nearby West Africa
IMPROVE DISTRIBUTION OF MARKET DATA
countries, there is the need for GCX to build
AND INFORMATION TO INVESTORS
modern warehouses across the country.
Without adequate data distribution of market
data and information (such as company
announcements), investors cannot be sure that
they have all the information that they need for

FACILITATE THE ESTABLISHMENT OF • Harmonization of trading, clearing

CURRENCY TRADING PLATFORM depository and settlement framework
Working with the Bank of Ghana and the Ghana • IntegratedTradingplatforms
Stock Exchange, a currency exchange trading • Harmonization of listing and regulatory
platform can be established to facilitate the requirement
trading of the cedi with the G10 major currencies • Creation of Qualified West Africa Brokers
and regional currencies. This will promote (QWAB) and common passport
transparency in foreign exchange dealings in
the country and also assist the central bank have UTILIZE BLOCKCHAIN APPLICATIONS IN
valuable data on FX transactions. The Bank of FINANCIAL SERVICES
Ghana will use the exchange’s infrastructure to
implement monetary policy and provide liquidity The emergence of crypto currency brought to
to the market through FX transactions. light how blockchain’s properties make it ideal for
financial applications. Blockchain facilitates safe,
FACILITATE THE INTEGRATION OF WEST easy transactions, and builds trust between trading
AFRICAN CAPITAL MARKET partners. It can even be used to quickly identify
The process for integrating the region’s capital individuals through digital IDs. Many financial
market started in 2010 with the signing of a institutions in both the developed and emerging
Memorandum of Understanding (MoU) by the economies are therefore investing in blockchain
stock exchanges and the regulatory authorities solutions. Ghana cannot be left behind in the use
in the region to deepen cooperation, promote of this technology. It is therefore necessary to
mutual assistance and facilitate the exchange of explore the usage of blockchain in the following:
information and consultations among countries. A 1) Clearing and Settlements: The accurate
governing council has been inaugurated called the recording capabilities of blockchain may make
West Africa Capital Markets Integration Council current clearing and settlement procedures
(WACMIC). This platform is also complemented redundant, resulting in faster transactions and
by the West Africa Securities Regulators reduced costs for financial institutions, and
Association (WASRA). Ghana will benefit from the 2) Cross-border transactions: Transferring money
integration in terms of the creation of a broader across borders has traditionally been slow and
capital market and the facilitation of the fulfilment expensive, since systems typically pass through
of its aspiration as the financial hub of West Africa. multiple banks on the way to the payment’s final
Ghana needs to play a catalyst role to bring about destination. Blockchain, can make the process
the following: faster, more accurate and less expensive.
Pillar 4
4. IMPROVING REGULATION, ENFORCEMENT AND MARKET CONFIDENCE
Regulation and Confidence - Specific Strategic Initiatives
• Improve SEC financial and human capacity • Implement Conduct of Business Guidelines
• Resolve the impairment of portfolio account assets • Implement a coordinated investor education program
• Create investor protection fund • Simplify structure of CIS
• Outsource insurance portfolio fund management • Require a standardized investment performance reporting
• Strengthen and enforce corporate governance standards • Improve SEC powers to enforce laws and regulation,
including resolution powers
• Improve licensing regime • Acquire surveillance system
• Implement risk-based supervision • Attain IOSCO Signatory A status
• Passing of the insurance bill • Develop regulation for crowdfunding
• Establish a regulatory sandbox • Implement the role and regulation of SROs
• Implement AML/CFT Guidelines and monitoring capacity

IMPROVE SEC FINANCIAL AND HUMAN complex instruments may be challenging for
CAPACITY even well-informed customers (or the brokers
It is critical to ensure that the capital market themselves) to properly appreciate,
regulator can protect vulnerable investors
before opening up significant new investment • Customers are often uninformed about even
opportunities for them. This means SEC must the simplest instruments and often reluctant
to become more engaged, preferring to rely
be resourced to play its vital role. This will mean
on a trusted broker,
increasing financial and human resources for
SEC, hiring experienced professional staff and • Brokers are highly dependent on client
delivering internal capacity building training commissions for their own remuneration.
programs consistently. Financial resourcing This creates pressure to generate trading
options to be considered could include an annual activity and therefore a potentially significant
budgetary amount, determined through a pre- conflict between the interests of the broker
agreed formula for a specific period (e.g. the next and those of their client,
five years, so as to avoid the need for renegotiation
every year), a perpetual fund to be invested by • There usually is a wide range of instruments
SEC in GoG bonds, and additional fees collected available for a firm to offer a customer at any
from other parts of the financial sector benefiting one time, with new products appearing
regularly, and
from SEC but not currently contributing, such as
Pension Funds. • Firms often have direct conflicts of interest
that are difficult for even a well-informed
IMPLEMENT THE ROLE AND REGULATION OF customer to spot, understand, avoid or
SELF-REGULATORY ORGANIZATIONS manage: a firm may have been involved in the
The current legal framework incorporates the structuring of the instrument it is selling; a
recognition of Self-Regulatory Organizations firm may be selling off a proprietary position;
(SROs) which are empowered to create and enforce a broker may be selling securities from the
rules relevant to their field of activity. The SEC account of another customer with whom they
will monitor their rules to ensure appropriateness have a closer relationship.
and that they are being adequately monitored and
enforced by the SRO, but otherwise they represent RESOLVE THE IMPAIRMENT OF PORTFOLIO
a delegation of some of the responsibilities ACCOUNT ASSETS
of the SEC. Usual candidates for SROs are Following the SEC’s sanitisation efforts in 2019
stock exchanges, clearing houses and industry and the BoG’s cleanup in 2018-2019, there is the
associations such as the Ghana Securities Industry need to enhance liquidity for the remaining Fund
Association (GSIA). Managers and enhance investor confidence. This is
important for investors who are finding it difficult
IMPLEMENT CONDUCT OF BUSINESS to redeem their investments. This situation poses
GUIDELINES a greater hindrance to capital formation and
This will include proper transition arrangements economic growth especially in an underdeveloped
that recognize an immediate application of all country where capital is scarce. There is the need
matters relating to fair treatment of clients and to establish an investor protection fund to mitigate
prioritization of their interests. Proper conduct is the fiscal impact of such future occurrences and in
at the heart of securities regulation. While the risk market dislocation events. One of the key actions
of misconduct is real in all of the financial sector, to be taken to win back confidence is facilitating
it is particularly relevant to securities market for the redemption of impaired portfolios. This means
many reasons including the following: that the impaired portfolio account assets must be
ring-fenced, quantified and resolved.
• The asymmetry of information between
firms and their customers is extreme.
• Even the simplest securities instruments

are relatively complex compared to classic
banking and insurance products. More

IMPLEMENT A COORDINATED INVESTOR stipulated in its investment guidelines. The aim of

EDUCATION PROGRAM this initiative therefore, is to ensure that insurance
As the investing populace grows, enhancing their funds are professionally managed and channeled
knowledge will become more and more important. to the capital market.
Growing awareness of risks and returns, personal
financial planning, rising income levels, planning REQUIRE A STANDARDIZED INVESTMENT
for retirement as the economy matures will help PERFORMANCE REPORTING
individuals make financial decisions that are more There is a wide variation in investment performance
important to their future well-being especially as reporting by asset management firms which has
the level of financial literacy for most local investors not helped build investors’ confidence. There
and the skills set of investment professionals are is the need for consistency among investment
relatively low. This calls for a regular, sustained management firms of the way returns are calculated
and well-planned financial education campaign and displayed in a performance presentation to
for all stakeholders in the markets. ensure full disclosure and fair representation of
their investment performance.
CREATE INVESTOR PROTECTION FUND
The recent situation where many investors are STRENGTHEN AND ENFORCE CORPORATE
finding it difficult to redeem their investments with GOVERNANCE STANDARDS
asset management companies has highlighted the Among the reasons cited for the recent failure of
need for the establishment of an Investor Protection several financial institutions is the lack of adherence
Fund (IPF) by the Securities and Exchange to corporate governance standards which makes it
Commission with the aim of compensating retail imperative to strengthen and enforce corporate
investors whose investments are impaired through governance structures of financial institutions
the misconduct of asset management firms. in the capital market. There is the need to create
specific mandatory governance standards for
SIMPLIFY STRUCTURE OF CIS regulated entities, and an appropriate “comply
Collective Investment Schemes, open to or explain” code for listed companies, tailored to
subscription by the public, can take one of two Ghana’s market.
forms: Mutual Funds and Unit Trusts. Each of
these has a different regulatory and governance IMPLEMENT AN ENHANCED LICENSING
structure and implication. Unit Trusts, per local REGIME
law, has a relatively weaker governance framework The low barrier to obtaining an asset management
since the trustees often serve as custodians. There license has brought to the market many unfit fund
is the need to create a single framework to avoid management institutions whose activities have
confusion, ensure accountability and minimize short changed investors. The objective of this
arbitrage. initiative is to tighten the licensing requirements
by ensuring that entrants have adequate resources
REQUIRE INSURANCE COMPANIES TO to operate, personnel are duly qualified and
OUTSOURCE THEIR INSURANCE PORTFOLIO experienced, , and fit and proper hurdles.
TO FUND MANAGERS
Insurance portfolios
are carrying significant
levels of impaired
assets. The reason for
this trend is that many
insurance firms lack
the requisite technical
expertise to manage
portfolios professionally.
In addition, NIC does
not enforce adherence
to the asset allocation
of insurance portfolios

This could include clearer distinctions between FACILITATE THE PASSING OF THE
firms able to give investment advice only, those INSURANCE BILL
able to manage client accounts and those allowed Many of the elements of the bill are already being
to manage public-offer CISs. applied in the market place. The bill deals with
governance of the insurers where insurers will be
ACQUIRE SURVEILLANCE SYSTEM required to establish risk management policies,
To be effective capital markets operator separate risk oversight from management and
and regulator, the GSE and SEC must have publish a code of corporate governance. Another
comprehensive, real-time data about the capital area of the bill deals with a more sophisticated
market and the ability to analyze market behavior solvency requirement. Unfortunately, the passage
through the acquisition of a market surveillance into law of the bill has delayed making NIC lack
system. The GSE and SEC must have this the necessary legal backing to implement stricter
surveillance system and the tools to analyse data measures for the safety and soundness of the
from it so as to spot egregious conduct, identify insurance industry.
trends in the market, and re-construct market
movements accurately. DEVELOP REGULATION FOR
CROWDFUNDING
IMPROVE SEC POWERS TO ENFORCE LAWS Crowdfunding has been trending over the past
AND REGULATIONS few years. It serves as an alternative form of fund
SEC’s power to enforce laws and regulation is raising from the public. It is important therefore
limited due to the nature of the legal framework for SEC to develop clear regulations, aimed at
that governs its operations. There is the need protecting public and informing decisions, without
to improve the legal powers of SEC so that it opening up riskier issuance risks.
can enforce laws and regulations and impose
meaningful proportionate fines. IMPLEMENT THE REGULATORY SANDBOX
As the market develops and technology
IMPLEMENT RISK-BASED SUPERVISION application in the capital market increases,
Risk-Based Supervision (RBS) is gradually it becomes necessary therefore to launch a
becoming the dominant approach to regulatory framework for the testing of innovative, Fintech
supervision of financial institutions around the solutions and the identification of appropriate
world. It is a comprehensive, formally structured regulatory frameworks for them. The essence of
system that assesses risks within the financial this initiative is to promote product development
system, giving priority to the resolution of those and innovation. The Commission has developed
risks. In line with current market trends and the guidelines that need to be implemented in this
current financial crisis due to the failure of many regard.
financial institutions in Ghana, it is imperative
for the regulators to double their effort towards
implementing risk-based supervision.
BECOME SIGNATORY TO IOSCO MOU

SEC needs to make the necessary changes in order
to Act 929 in order to become signatory to IOSCO
Multilateral Memorandum of Understanding.
This will mean implementing best practices as a
securities regulator in accordance with IOSCO’s
principles which will enhance SEC’s capacity as a
regulator.

08.Implementation Framework Ghana Capital Market Master Plan
GOVERNANACE OF THE DEVELOPMENT PLAN
91. The governance structure is designed at four levels consisting of a Champion, a Steering
Committee, an Industry Review Committee and a Secretariat.
FIGURE 17: THE GOVERNANCE STRUCTURE OF THE DEVELOPMENT PLAN
CHAMPION STEERING COMMITTEE
92. A champion is a person who provides strong 94. As indicated, a Steering Committee will
leadership for, and rigorously defends a cause. be formed to oversee the implementation of
the Capital Market Master Plan. This Steering
93. This project has a very large number of Committee will be the ultimate authority in matters
stakeholders each of whom has a different set of relating to initiatives, priorities and timings.
interests and agendas. It needs a publicly known
and easily identified champion behind whom these 95. The Steering Committee will monitor and
stakeholders can rally. It needs to be somebody direct the progress of the plan, with reports coming
with credibility in the financial sector, who can from the working group via the secretariat. The
represent the vision convincingly and who will be Steering Committee will resolve issues arising at
able to negotiate lasting agreements between the the working group level, whether these be matters
participants. The Minister for Finance will serve of design, of new obstacles emerging, of conflicts
as the Champion of the Capital Market Master in the priorities of different working groups or of
Plan, and will mobilize support from a whole of changes required to plans. It is proposed that the
government perspective given the far-reaching Steering Committee include senior representatives
implications of effective execution of this plan. from the MoF, BoG, SEC, GSE, GCX, NPRA,

NIC, CSD and GSIA, and that they meet at least • Identify, recommend and approve funding
every four months. It is further proposed that the options
Director-General (DG) of SEC be the chair for this
• Review, confirm and take responsibility for
committee. The Steering Committee will have at
key objectives, performance indicators and
least the following three key objectives: development targets
a) Direction – drive and direct progress • Monitoring risks and ensure that an
on implementation and ensure it remains appropriate risk management approach is
focused on the sustainable economic applied
development of Ghana
• Ensuring the quality of project and
b) Oversight – monitor progress and results controlling changes to the plan as it
and resolve obstacles and risks as they arise develops
c) Stakeholders – retain the buy-in and • Oversee the work of the secretariat and
commitment of all stakeholders. working groups
For these reasons, it is vital that the Steering • Review and approve implementation plans
Committee be comprised of persons empowered of the working groups
to take decisions and make commitments on
• Review and approve regular progress
behalf of the entities that they represent.
reports
96. The Steering Committee’s overarching role • Liaise as necessary with Financial Stability
to ensure delivery of market development may Council and other authorities.
encompass a wide range of tasks. These are the
tasks usually associated with a project board, and 97. Table 2 below shows the proposed composition
potentially include the following: of the Steering Committee.
• Take key decisions on implementation
priorities, timings and strategy
Table 4: Steering Committee Composition

Name of Institution No of Members
1 Securities and Exchange Commission 3
2 Ministry of Finance 3
3 Bank of Ghana 2
4 National Pensions and Regulatory Authority 1
5 National Insurance Commission 1
6 Central Securities Depository 1
7 Ghana Stock Exchange 1
8 Ghana Commodities Exchange 1
9 Ghana Securities Industry Association 2
10 Ghana Association of Bankers 1
11 Chamber of Corporate Trustees 1
TOTAL 17
INDUSTRY REVIEW COMMITTEE

Secretariat, the Industry Review Committee shall:
98. The Industry Review Committee shall be a key – Meet at least twice a year to consider the progress
committee for consultation with the securities reports from the Secretariat and hear an update on
industry. It will be constituted through the progress from the Steering Committee
Securities and Exchange Commission and the – Discuss development progress and priorities, to
members’ breadth of experience shall cover all key ensure proposals continue to meet the changing
areas of the capital market. With support from the needs of the market

– Give feedback on the effectiveness of initiatives 101. Each group will comprise representatives of
delivered the entities that are responsible for the delivery
– As necessary, develop relevant proposals for of the initiatives assigned to that group. Those
consideration by the Steering Committee. representatives must be able to ensure that
the entity they represent will follow through
on commitments made at the working group
WORKING GROUPS level. It may be necessary to have more than one
representative from an entity.
99. There will be four working groups, as follows:
• Markets and Products 102. Each working group will also nominate a
• Legal and Regulation member who has good technical knowledge of the
• Market Infrastructure work of the group, as group coordinator to support
• Education and Research the Secretariat as necessary.
100. The strategic initiatives will each be assigned 103. It is proposed that the working groups
to one of the four working groups. An outline of the include representatives of at least the following
proposed assignation is shown in Table 3 below. stakeholders:
Table 5: Composition of Working Groups

Working Group Suggested minimum constituents
Markets and Products SEC, GSE/GFIM, CSD, MoF, GSIA, investor representatives
(pension funds, insurance)
Legal and Regulation SEC, BoG, NPRA, MoF, GBA, AG, RaD
Market Infrastructure SEC, GSE/GFIM, CSD, MoF, GSIA, GAB
Education and Research SEC, GSE/GFIM, CSD, MoF, GSIA, ICAG, MoE, GISI
104. Among the functions of the working groups – Help brainstorm solutions to issues arising
are as follows: on their initiatives
– Meet as often as necessary (at least
quarterly) to plan and control the initiatives – Make recommendations to the Steering
that they have been assigned Committee on implementation issues and
update of the status of implementation.
– Develop their own work plan for the delivery
of the initiatives assigned to the group by the
Steering Committee SECRETARIAT
– Develop a detailed implementation plan 105. The Secretariat will be the coordinating center
for initiatives that are to be delivered in the for the Capital Market Master Plan. This office will
near term, based so far as possible on using
be managed by a Senior Project Manager who
resources available to the entities represented
on the group has many years of industry experience and has
built key relationships within the market. This
– Develop an estimated costing for the individual must also understand the vision, the
implementation of each initiative. Where framework and the deliverables of the plan. There
external financing is required, they should will be four working groups with responsibility for
approach the Steering Committee for these the implementation of the plan. The secretariat
funds will work closely with the four working groups.
– In so far as it becomes relevant, propose 106. The Secretariat will have the Project Manager
other initiatives critical to the development of and support staff, and will perform project office
capital markets to the Steering Committee functions including the following:

– Report to the Steering Committee and carry delivery of the initiatives on time or on budget
out any instructions given. and ensure that they are either resolved at the
level of working groups or escalated to the
– Coordinate the activities of the working Steering Committee.
groups.
– Develop a budget for implementation of
– Administer the logistics for Steering the initiatives within their various phases,
Committee and Industry Review Committee working from inputs from the working groups.
meetings.
– Monitor, evaluate and report progress to
– Provide secretarial assistance to Steering Steering Committee, possibly quarterly.
Committee and the working groups.
– Create a data bank of relevant capital
– Ensure that the working groups have the market information for use by the Steering
right membership given their responsibilities Committee and working groups.
and that they are progressing.
– Prepare semi-annual and annual progress
– Identify any problems that may impact the reports.
SEQUENCING OF THE INITIATIVES
107. The development of a capital market is a instruments if the current market products are
step-by-step process where pragmatic sequencing yet to be assimilated. Bearing this in mind, the
is of vital importance. The market cannot development framework for the capital market has
suddenly mature by introducing sophisticated been structured in phases as follows:
Phase 1: Making the Market Attractive (2020 – 2022)
This will be the preparatory work where the goal is to restore market
confidence, enlighten the understanding of key market participants
and resolve fundamental issues plaguing the market especially in
the area of regulation. Key strategic initiatives to be undertaken
include:
a. Addressing the weaknesses of government bond market
b. Enhance conduct regulation
c. Resourcing Securities & Exchange Commission
d. Implement enhanced licensing regime
e. Sanitizing portfolio accounts
f. Establishing of an investor protection fund
g. Develop additional long-term incentivized savings schemes
h. Introducing market makers
i. Establishing securities lending and short selling for market
makers
j. Demutualized status of Ghana Stock Exchange

Phase II: Increasing Competitiveness of the Market (2023 – 2025)
This phase will focus on deepening the quality and breadth of

services and facilities in selected strategic niches, such as SOE &
SME listing, venture capital industry, etc.
At the same time, there will be continued efforts to strengthen

core segments of the capital market.
Key actions to be undertaken are:

a. Deepen SOE and SME pipeline
b. Establish business development unit at GSE to grow
SME pipeline
c. Revise Venture Capital Trust Fund Act
d. Deepen synergy between insurance and capital market
e. Bring municipal bonds to the market
f. Launch margin trading
g. Open up short selling and securities
loans
h. Introduce asset-backed securities
i. Bring on board forward and futures contract at the
commodities exchange.
Phase III: Consolidating the gains made (2026 – 2029)
This phase will focus on bringing to completion the initiatives

which were started in the two phases in addition to new initiatives
that may be started in this phase. Almost all the initiatives will be
started in the first two phases of the master plan.
It must be understood that development may not necessarily

occur in such a sequential manner. Thus, depending on the
situation, some of the initiatives may be carried out earlier than
proposed or later than suggested.
At the time of finalizing this document, several of the initiatives

had commenced. This plan seeks to ensure that adequate
resources and dedicated teams are committed to driving the
initiatives to meaningful outcomes and communicating same to
key stakeholders.

108. The Table below shows all the strategic initiatives, indicating the phases of the plan and the Working
Group responsible for the initiatives.
Table 6: Strategic Initiatives and Assigned Responsibilities
Steering SEC resources

Committee
Responsible Phase 1 Phase 2 Phase 3
Group (2020 – 2022) (2023 – 2025) (2026 – 2029)
Markets and • Strengthen Government Bond market • Bring SOEs and SMEs to market Completing
Products • Deepen Retail access to government bonds • Free float review the initiatives
Working • Enhance Conduct Regulation • Deepen collaboration between GSE and started in first
Group • Develop additional long-term incentivized GIPC two phases.
savings schemes • Comprehensive review of capital market
• Introduce Repo Market taxation
• Promote Collective Investment Schemes • Implement futures trading in Gold and Cocoa
• Grow Wholesale Corporate Bonds • Commencement of Margin Trading
• Develop REITS • Issuance of Municipal Bonds
• Develop SOE & SME pipeline for listings • Retail market asset-backed securities
• Prepare for futures trading • Deepen role of Private Funds in qualified
• Expedite passage of municipal finance bill investor portfolios
Education • Expand training of Intermediaries through • Strengthen offerings of CPDs Completing
and Research GISI • Deepen bilateral and multilateral the initiatives
Working • Implement sustained and coordinated Investor relationships started in first
Group Education • Deepen synergy between insurance two phases.
• Establish Investor Protection Fund industry and capital markets
• Introduce Compulsory Continuous • Grow relationships with international investors
Professional Education • Insurance Awareness programme
• Develop Financial Data Hub • Conduct local and foreign Roadshows to
raise profile of Capital Market
Market • GSE demutualization • Introduce Mandatory Credit Ratings Completing
Infrastructure • Licensing of Credit Rating Agencies • Enhance CSD settlement guarantee fund the initiatives
Working • Develop legal framework for market makers • Deepen Digital retail platforms for started in first
Group • Enhance Market Surveillance System trading two phases.
• Finalize securities lending and borrowing • Open up Short Selling / Securities
guidelines Lending
• Enhance CSD processes to allow for pre-
validation and buying in
• Establish Capital Market Fintech Forum
Legal and • Implement enhanced Licensing Regime • Crowd funding regulation
Regulatory • Complete sanitization of Portfolio Accounts • Revision of VCTF Act
working (Fund Managers) • Strengthen deployment of Risk-Based
Group • Improve SEC Powers in the Act Supervision
• Review regulatory framework for CIS • Clarify Public Offer framework
• Review BoG Tier 2 Capital requirements on • Consolidate and enhance regulatory
bond issuances framework
• IOSCO MMoU Signatory A
• Review Insurance Bill
• Clarify NPRA guidelines on international
investments
• Implement framework for Regulatory Sandbox
• Build out the role and regulation of SROs

MONITORING THE DELIVERY OF THE PROJECT
109. The Steering Committee will need to ensure that monitoring is in place at several different levels,
including the following:
Monitoring the delivery of Monitoring the delivery

Monitoring of
initiative Monitoring the delivery
the vision as a whole the vision as a whole
delivery for time for cost
The Steering Committee will At the level of the Working The Steering Committee,
need to choose metrics that Groups, there will need to through the Secretariat,
will best serve to demonstrate be careful monitoring of the will also be responsible
the advances made towards progress of the groups in the for monitoring the cost
the vision. This is discussed delivery of their initiatives. of the project, particular,
further below. This is likely to be best the external costs. For this
done through the creation monitoring to be effective,
of project plans for the when the Working Groups
various initiatives anchored are building their detailed
around the delivery of clear implementation plans for the
and identifiable milestones various initiatives, they will
at regular intervals. The need to estimate the external
completion of tasks and the costs of each initiative. There
delivery of those milestones is a cost estimate provided in
will comprise the heart of a later section, but this is only
the monitoring. for initial guidance of the
Steering Committee and has
been calculated on a broad
basis, without reference to
detailed plans by experts in
the field. Cost estimates by
the Working Group will be
informed by the actual plan
for implementation and by
knowledge of costs in situ.
Monitoring delivery of the vision.
110. The Steering Committee will be the ultimate 111. As a starting point in that process, the
authority responsible for the delivery of the vision: following are offered up as a first draft of potential
“a deep, efficient and well-diversified capital indicators and targets for the Steering Committee
market with a full range of products attractive to consider. Reaching targets is of course subject
to domestic and international investors”. As a to being able to count on critical success factors,
part of meeting this responsibility, it will need which are also discussed below:
to identify key development indicators that it
will use to monitor progress in the creation of a
deep, efficient and attractive market. This includes
setting challenging but plausible targets for those
indicators.
TABLE 5: POTENTIAL KEY DEVELOPMENT INDICATORS
Potential key development indicators Baseline 5-year target 10-year

2018 2024 target
2029
Market depth, attractiveness and confidence
Absolute amount raised per year in equity GH¢2..02 Billion GH¢6.0 Billion GH¢15.2 Billion
Absolute amount raised per year in bonds GH¢20.88 Billion GH¢40.00 Billion GH¢52.00 Billion
Turnover of equity market (annualized trading value/ market 1.1 percent 10% 15%
capitalisation)
Turnover of bond market (annualized trading value/ aggregate 44.4 percent 55% 70%
nominal value)
Market Capitalisation as a percentage of Ghana GDP 20.3 percent 40% 50%t
Number of securities with market makers None 10 15
Percentage of corporate bond issuance by banks None 20% 30%
Absolute value of assets under management in Collective GH¢2.5 Billion GH¢15.2 Billion GH¢37.8 Billion
Investment Schemes
Absolute value of assets under management in managed GH¢14.2 Billion GH¢17.1 Billion GH¢27.5 Billion
accounts
Number of active CSD accounts 971,403 2 Million 4 Million
Percentage of population investing with Fund Managers 1.7 percent 5.0% 11.0%
Effectiveness of SEC
Number of professional regulatory staff at SEC 29 65 75
SEC Income (not including fines) GH¢13,115,452 GH¢56,000,000 GH¢113,000,000
Percent of Market Operators Inspected (percent) 20 35 50
Number of enforcement actions taken by SEC (not for 11 30 50
administrative matters such as late filing)
Number of people passing certification programs for entry into Survey Needed
the industry
Number of people attending CPD courses (cumulative) N/A 400 1,000

Critical Success Factors intentions of each firm. They will be estimated and
met by participants as the program develops.
112. For the Steering Committee to set any targets
for these key development indicators it should be b) Large-scale cross-entity initiatives, such as the
clear about the assumptions and success factors demutualization of the GSE, the acquisition and
that will need to be in place for the targets to be deployment of appropriate surveillance systems,
met. In addition to the preconditions mentioned the design and introduction of new markets, the
earlier, these include the following: resolution of the portfolio accounts issues, and
training programs to bring participants and
authorities up to capacity and to keep them there.
• Maintenance of political, social and The costs of these initiatives will depend on the
economic stability detail and scope of the Working Group plans and
will be estimated at that stage. They may, of course,
• Macroeconomic management
continues to be strengthened vary enormously depending on the underlying
assumptions.
• No severe external economic shocks
c) Incremental external costs directly related
• The Steering Committee is able to to the program – these include the costs of the
source adequate financing for the
project and to maintain control and Secretariat, the logistics of running new bodies
direction of the project such as the Steering Committee and the Working
Groups and the costs of creating new regulations
• An effective Secretariat can be appropriate for the market and acceptable to all
created participants. These will also depend on exact
details but as a guide to these, assuming a three-
• All key participants can meet the
commitments they make in the person secretariat with qualified and credible
working groups professionals, it is estimated that the team will cost
no less than USD 200,000 per year. The logistics
• Adequate financial and human around the meetings of the main bodies (Steering
resources can be found to boost the Committee, Industry Review Committee and
capacity of the SEC.
Working Groups are estimated to cost up to USD
50,000 per year assuming that all persons attend
as representatives of interested stakeholders
and not on the basis of any fees paid). If external
consultants are brought in to draft the regulations
COSTS OF DEVELOPMENT required to support all the proposals set out above,
this could be costly. It is emphasized, however,
that external experts can only bring so much to
113. The costs of the implementation will include
these regulatory frameworks. They can only work
many different classes of costs, which for simplicity
off international examples and lessons learned; it
are categorized into the following groups:
will therefore be essential for them to be closely
accompanied by the market authorities and actors
a) Internal costs of market actors – which
so as to ensure that the frameworks are appropriate
participants meet as part of their own development.
for Ghana and actually workable in the context in
These include costs of systems updates and
which they will be implemented.
additional resources required (human and
financial) for new services offered or new functions
undertaken, changes to risk management
and compliance processes, and technical and
legal assistance to support the creation of new
regulatory frameworks and the evolution of the
firms. These costs will depend on the exact plans
of the Working Groups for the implementation of
the initiatives and the circumstances and strategic

Internal Cost of Market Actors

1.
a. Cost of systems updates
b. Additional resources required for new services offered
c. Changes to risk management and compliance processes
d. Technical & Legal assistance to support the creation of new
regulatory frameworks
Large-scale cross-entity initiatives

2.
a. Demutualization of the GSE

b. Acquisition and deployment of appropriate surveillance systems
c. Design and introduction of new markets
d. Resolution of the portfolio accounts issues, and training programs
Incremental external costs directly

3. related to the program
a. Costs of the Secretariat, the logistics of running new bodies
such as the Steering Committee and the Working Groups
b. Costs of creating new regulations appropriate for the market
and acceptable to all participants

APPENDIX
TABLE 7: FTSE RUSSELL – FTSE COUNTRY EQUITY CLASSIFICATION CRITERIA
CRITERIA DEVELOPED ADVANCED SECONDARY FRONTIER

EMERGING EMERGING
World Bank GNI Per Capita Rating (Atlas Method)
Credit Worthiness
Market & Regulatory Environment
Formal Stock market regulatory authorities actively monitor
market (e.g., SEC, FSA, SFC)
* * * *
Fair and non-prejudicial treatment of minority shareholders
* *
No or selective incidence of foreign ownership restrictions
* *
No objection to or significant restrictions or penalties applied to
the investment of capital or the repatriation of capital and income
* * * *
No or simple registration process for international investors
* *
Foreign Exchange Market
Developed foreign exchange market
* *
Equity Market
Brokerage - Sufficient competition to ensure high quality broker
services
* * *
Transaction costs - implicit and explicit costs to be reasonable
and competitive
* * *
Stock lending permitted
*
Short sales permitted
*
Developed Derivative market
*
Off-exchange transactions permitted
*
Efficient trading mechanism
* *
Transparency - market depth information/ visibility and
timely trade reporting process
* * * *
Clearing, Settlement and Custody
Settlement - Rare incidence of failed trades
* * * *
Settlement Cycle (DvP)
* * * *
Central Securities Depository
* * *
Central Counterparty Clearing House (Equities
* *
Settlement - Free delivery available
*
Custody-Sufficient competition to ensure high quality
custodian services
* * *
Account Structure operating at the Custodian level (Securities
and cash)
*

TABLE 8: FTSE RUSSELL – MINIMUM INVESTABLE MARKET CAP AND SECURITIES

COUNT CRITERIA
For Emerging markets, the new minimum investable market cap and securities count requirements are
as follows:
1. For Entry - the combined investable market cap of the eligible securities is greater than 10 basis points
of the FTSE Emerging All Cap Index, and a minimum of 5 securities meet the FTSE Global All Cap Index
eligibility screens.
2. For Exit (i.e. to be placed on the Watch List) - the combined investable market cap of the eligible
securities falls below 5 basis points of the FTSE Emerging All Cap Index, or the number of eligible stocks
decreases to 2 or fewer.
Secondary Emerging Minimum Stock FTSE Emerging Investable Market GNI

Requirement All Cap Cap*
Entry 5 10 Basis Points USD 6.03bn Lower Middle
Exit 2 5 Basis Points USD 3.02bn
*Data as of close 31 December 2019

CAPITAL MARKET WORKING GROUP
Asset
09. Glossary of
An item of property owned by a person or
C
company, regarded as having value and Capital Market
available to meet debts, commitments, or
legacies. Capital markets are venues where savings
and investments are channelled between
Asset Class the suppliers who have capital and those
who are in need of capital.
Terms
A grouping of investments that exhibit

similar characteristics and are subject
to the same laws and regulations. Asset Collective Investment Scheme
classes are made up of instruments which It is any arrangement with respect to
often behave similarly to one another in property of any description, including
the marketplace. money, the purpose or effect of which
is to enable persons taking part in the
Asset Management
arrangements (whether by becoming
Refers to the management of owners of the property or any part of it
investments on behalf of others. The or otherwise) to participate in or receive
process essentially has a dual mandate -
profits or income arising from the
A
appreciation of a client’s assets over time
while mitigating risk. acquisition, holding, management or
disposal of the property or sums paid out
Asset-Backed Securities of such profits or income.
A type of financial investment that is
Commodity
collateralized by an underlying pool of
assets—usually ones that generate a cash A commodity is a basic good used in
flow from debt, such as loans, leases, commerce that is interchangeable with
credit card balances, or receivables. other goods of the same type.
B
Corporate Bond
Bankruptcy
Bankruptcy is a legal proceeding involving A corporate bond is a type of debt
a person or business that is unable to security that is issued by a firm and sold
repay their outstanding debts. to investors.
Blockchain Cross-Border Transactions

A blockchain is a type of database which The transaction between two entities
collects information together in groups, from different countries, territories etc.
also known as blocks, that hold sets of These transactions do not take into
information. Blocks have certain storage account territorial limit or boundaries.
capacities and, when filled, are chained
onto the previously filled block, forming a Crowdfunding
chain of data known as the “blockchain.”
Crowdfunding is the use of small
Bond amounts of capital from a large number
A bond is a fixed income instrument that of individuals to finance a new business
represents a loan made by an investor venture.
to a borrower (typically corporate or
governmental).
Broker-Dealer
A Broker-Dealer (B-D) is a person or firm
in the business of buying and selling
securities for its own account or on behalf
of its customers.

D
Data Bank Equity
A large collection of information that can A bond is a fixed income instrument
be searched through quickly, especially by that Equity, typically referred to as
a computer. shareholders’ equity (or owners’ equity
for privately held companies), represents
Debt Market the amount of money that would be
The bond market—often called the debt returned to a company’s shareholders if
market, fixed-income market, or credit all of the assets were liquidated and all
market—is the collective name given to all of the company’s debt was paid off in the
trades and issues of debt securities. case of liquidation.
Demutualization Eurobond
Demutualization is a process by which a A Eurobond is a debt instrument that’s
private, member-owned company, such denominated in a currency other than
as a co-op, or a mutual life insurance the home currency of the country or
company, legally changes its structure, in market in which it is issued.
order to become a public-traded company
F
owned by shareholders. Fixed Income
Fixed income broadly refers to those
Depository Account
types of investment security that pay
Depository Account means any account of investors fixed interest or dividend
the Client or for the Client with an entity payments until its maturity date.
registered as a depository participant as
per the relevant regulations in which the
G
securities comprising part of the portfolio
of the client are kept by the portfolio GDP
manager. Gross Domestic Product (GDP) is the
total monetary or market value of all the
Digital Platform finished goods and services produced
A digital platform can be thought of as within a country’s borders in a specific
the sum total of a place for exchanges of time period.
information, goods, or services to occur
between producers and consumers as well Green Bond
as the community that interacts with said A green bond is a type of fixed-
platform. income instrument that is specifically
earmarked to raise money for climate and
Diversification environmental projects.
Diversification is a risk management
I
strategy that mixes a wide variety of
investments within a portfolio. Inflation
Inflation is the decline of purchasing
power of a given currency over time. A
E
E-Bond quantitative estimate of the rate at which
E-bonds refer to a joint European sovereign the decline in purchasing power occurs
bond (Eurozone common bond) issued by can be reflected in the increase of an
European Debt Agency. average price level of a basket of selected
goods and services in an economy over
Equity Market some period of time.
An equity market is a market in which
shares of companies are issued and
traded, either through exchanges or over-
the-counter markets.

Infrastructure Margin Trading

Infrastructure is the general term for the Margin trading refers to the practice of
basic physical systems of a business, using borrowed funds from a broker to
region, or nation. trade a financial asset, which forms the
collateral for the loan from the broker.
Insolvency
Insolvency is a term for when an Market Capitalisation
individual or company can no longer Market capitalization refers to the total
meet their financial obligations to lenders dollar market value of a company’s
as debts become due. outstanding shares of stock.
Interbank Market Market Efficiency

The interbank market is the global Market efficiency refers to the degree to
network utilized by financial institutions which market prices reflect all available,
to trade currencies between themselves. relevant information.
Investment Market Infrastructure

Investing is the act of allocating resources, A Market Infrastructure is a system
usually money, with the expectation of administered by a public organisation or
generating an income or profit. other public instrumentality, or a private
and regulated association or entity, that
Investment Portfolio provides services to the financial industry
A portfolio is a collection of financial for trading, clearing and settlement,
investments like stocks, bonds, matching of financial transactions, and
commodities, cash, and cash equivalents, depository functions.
including closed-end funds and Exchange
Traded Funds (ETFs). Memorandum of Understanding
A memorandum of understanding is an
Investor agreement between two or more parties
An investor is any person or other entity outlined in a formal document.
(such as a firm or mutual fund) who
commits capital with the expectation of Microfinance
receiving financial returns. Microfinance, also called microcredit,
is a type of banking service provided to
K
unemployed or low-income individuals
Key Stakeholders or groups who otherwise would have no
The primary stakeholders in a typical other access to financial services.
corporation are its investors, employees,
customers, and suppliers. Mortgage-Backed Securities
L
A Mortgage-Backed Security (MBS) is an
Liquidity investment similar to a bond that is made
Liquidity refers to the efficiency or ease up of a bundle of home loans bought from
with which an asset or security can the banks that issued them.
be converted into ready cash without
affecting its market price. Mutual Fund
A mutual fund is a type of financial vehicle
M
Macroeconomics made up of a pool of money collected from
Macroeconomics is a branch of economics many investors to invest in securities
that studies how an overall economy—the like stocks, bonds, money market
market or other systems that operate on a instruments, and other assets. Mutual
large scale—behaves. funds are operated by professional money
managers, who allocate the fund’s assets
and attempt to produce capital gains or
income for the fund’s investors.

P
Pension Fund Risk Management
A pension fund, also known as a Risk management is the process of
superannuation fund in some countries, is identification, analysis, and acceptance or
any plan, fund, or scheme which provides mitigation of uncertainty in investment
retirement income. decisions.
Portfolio Risk Premium

A portfolio is a collection of financial A risk premium is the investment return
investments like stocks, bonds, an asset is expected to yield in excess of
commodities, cash, and cash equivalents, the risk-free rate of return.
including closed-end funds and Exchange
Traded Funds (ETFs). Risk-Based Capital
Risk-based capital requirement refers to a
Primary Dealer rule that establishes minimum regulatory
A primary dealer is a bank or other financial capital for financial institutions.
institution that has been approved to trade
securities with a national government. Risk-Based Supervision
It is a comprehensive, formally structured
R
Regulator system that assesses risks within the
financial system, giving priority to the
A person or body that supervises a resolution of those risks. RBS is often
particular industry or business activity. contrasted with rules-based regulation.
Regulatory Framework
S
Savings Scheme
A Regulatory framework is legal
mechanism that exists on national and A scheme designed to encourage savings
international levels. It can be mandatory by making small deposits automatically
and coercive (national laws and regulations, into a special savings account.
contractual obligations) or voluntary
(integrity pacts, codes of conduct, arms Securities
control agreements). Securities are fungible and tradable
financial instruments used to raise capital
Repo Transactions in public and private markets.
A repurchase agreement (repo) is a form
of short-term borrowing for dealers in Solvency
government securities. Solvency is the ability of a company to
meet its long-term debts and financial
Risk Assessment obligations.
Risk assessment is a general term used
across many industries to determine the Steering Committee
likelihood of loss on an asset, loan, or Steering committees are advisory bodies
investment. Assessing risk is essential for that are made up of senior stakeholders or
determining how worthwhile a specific experts that provide guidance on a lot of
investment is and the best process(es) to different issues that could face companies
mitigate risk. such as budgets, new endeavours,
company policy, marketing strategies, and
Risk Capital project management concerns.
Risk capital refers to funds allocated to
speculative activity and used for high-risk, Stock Market
high-reward investments. The stock market refers to the collection
of markets and exchanges where regular
activities of buying, selling, and issuance
of shares of publicly held companies take
place.

Sustainable Development Goals days) backed by the Bank of Ghana on

The Sustainable Development Goals behalf of the Government.
or Global Goals are a collection of 17
interlinked global goals designed to be a Trustee
“blueprint to achieve a better and more A trustee is a person or firm that holds
sustainable future for all”. and administers property or assets for the
benefit of a third party.
Systemic Risk
U
Systemic risk is the possibility that an Underwriters
event at the company level could trigger
severe instability or collapse an entire An underwriter is any party that evaluates
industry or economy. and assumes another party’s risk for a fee.
V
Venture Capital Funds
T
Taxation
Venture capital funds are pooled
Taxation is a term for when a taxing
investment funds that manage the money
authority, usually a government, levies
of investors who seek private equity stakes
or imposes a financial obligation on its
in startups and small to medium-sized
citizens or residents.
enterprises with strong growth potential.
Treasury bills
A Treasury Bill (T-Bill) is a short-term
investment product (from 91 days to 365).

Acronyms
B BoG Bank of Ghana
C
CAGR Compounded Annual
Growth Rate
CAR Capital Adequacy Ratio
CI Composite Index
CSD Central Securities Depository
E ETF Exchange Traded Funds
N
NBFI
NIC
Non-Bank Financial
Institutions
National Insurance
F
Commission
FINSSP Financial Sector
Financial Sector Strategic
Strategic
NPL Non-Performing Loans
Plan
NPRA National Pensions
FSD Financial Sector Division
Regulatory Authority
FSC Financial Stability Council
G P
GAB Ghana Association of Bankers PNDC Provisional National
GAX Ghana Alternative Market Defence Council
GBA Ghana Bar Association
GCX Ghana Commodities
Exchange
GDP
GFIM
GhIPSS
Gross Domestic Product
Ghana Fixed Income Market
Ghana Interbank Payment
and Settlement System
R RAFIP
RCB
Rural and Agricultural
Finance Programme
Rural and Community
Banks
GIS Ghana Interbank Settlement ROA Return on Assets
GISI Ghana Investments and ROE Return on Equity
Securities Institute
S
GSE Ghana Stock Exchange
GSIA Ghana Securities Industry SDC Securities Depository
Association Company
SEC Securities and Exchange
Commission
I
IFC International Finance
SMEs Small and Medium Scale
Corporation
Enterprises
IFSC International Financial
SSNIT Social Security and
Services Center
National Insurance Trust
IOSCO International Organization
of Securities Commissions
T
IPO Initial Public Offering
TPFA Temporary Pension Fund
Account
M
MFI Microfinance Institutions
MMDA Metropolitan, Municipal and
MoF
MSMEs
District Assembly
Ministry of Finance
Micro, Small and Medium
Enterprises
V VCTF Venture Capital Trust Fund

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SEC - Capital Market Master Plan

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Ghana Capital Market Master Plan

DEVELOPING THE CAPITAL MARKET MASTER PLAN 45

Securities & Exchange Commission 2

essential driver for economic

Essentially, the Capital Market has

To grow the industry on a sustainable basis, the

3 Securities & Exchange Commission

Hon. Ken Ofori - Atta

Securities & Exchange Commission 4

I) Improving diversity of investment

II) Increasing the investor base. Increasing the

Improving diversity Strengthening Improving

the Capital Market Master Plan

5 Securities & Exchange Commission

Undoubtedly, the Ghanaian Capital Market in building a comprehensive ecosystem to

The plan is expected to position Ghana’s domestic market

It will facilitate mobilization of

agreed with key

Securities & Exchange Commission 8

NEED FOR CAPITAL MARKET DEVELOPMENT

The need for a plan to develop

1. Firstly, to fund Ghana’s

3. Thirdly, capital markets serve to manage systemic

9 Securities & Exchange Commission

CAPITAL MARKET IMPACT AND LINKAGES WITH GHANA’S DEVELOPMENT AGENDA

STATE OF THE CAPITAL MARKET IN GHANA

Total Market Total Market Domestic Market Domestic Market

Securities & Exchange Commission 10

Listed Companies million in 2019.

11 Securities & Exchange Commission

Securities & Exchange Commission 12

THE CAPITAL MARKET MASTER PLAN

13 Securities & Exchange Commission Securities & Exchange Commission 13

FIGURE 1: FLAGSHIP INITIATIVES OF MASTER PLAN

Digital Review of Investment

Introduction Issuance of Development of a

Securities & Exchange Commission 14

Making the Market Attractive (2020 – 2022): Early initiatives that do

Increasing Competitiveness of the Market (2023 – 2025): This phase

Introducing More Sophisticated Products and Consolidating Gains

15 Securities & Exchange Commission

Ghana’s Capital Market began to develop with the establishment of

Securities & Exchange Commission 16

Notwithstanding the recent growth 9, 11, 13 and 16 as illustrated in

17 Securities & Exchange Commission

CAPITAL MARKET’S IMPACT ON THE REAL SECTOR & INDIVIDUALS

Securities & Exchange Commission 18

INDIVIDUALS 1. Growth of Businesses

19 Securities & Exchange Commission

FIGURE 3: LINKAGE OF THE MASTER PLAN TO NATIONAL DEVELOPMENT STRATEGY

Capital Market Master Plan National Priorities Sustainable Dvt. Goals

Creating diversity of Increase Manufacturing CLIMATE ZERO

PILLAR 12 liquidity of securities Chain

Increasing the investor Strengthen Institutions GENDER QUALITY

PILLAR 2 base and the Rule of Law

Strengthening infrastruc- Strengthen Infrastructure INDUSTRY,INNOVATION DECENT WORK AND

ture and improving market and Technology adoption

PILLAR 3 services to enhance business

Improving regulation, Enhance Public Services PEACE, JUSTICE

OVERVIEW OF GHANA’S CAPITAL MARKET

Securities & Exchange Commission 20

FIGURE 4: LISTED GOVERNMENT OF GHANA DEBT TO GDP (GH¢ BILLIONS)

70.1 73.7 10%