The Ghana Stock Exchange (GSE) has opened its doors to start-ups businesses in the country to help them raise capital on the stock market.
This follows the GSE management’s recognition of high lending rates across financial intuitions as a major setback to the survival and growth of start-ups in the country.
A recent data by the Bank of Ghana showed the average lending rate at about 30% - a staggering rate for start-up companies who may just be struggling to break-even in the first two (2) to three (3) years from their commencement of business.
According to the GSE, the Ghana Alternative Market (GAX) has been created specifically to address the start-ups’ needs to raise capital and expand their operations.
Speaking to the media on the development - Head of Listing at the GSE disclosed that the stock market has, ”made provisions for start-ups; however, it is not all start-ups we cater to; we look at ones with a three-year business plan with very good projections as well as good fundamentals that will propel these businesses”.
She, however, noted that if the GSE considers the start-up business to be viable, then it will put it up for the general public to buy its shares.
She pointed out that the arrangement was based on the GSE’s acknowledgement that start-ups can’t just happen to be profitable the day after they’re listed. Hence, they are offered the opportunity to issue bonds, invite investors and grow their companies.
The news has been received by the business public as a welcomed move: one that represents a complete departure from the manner in which the GSE operated previously that somehow shut-out those businesses who actually needed the investments more.
Meanwhile, the country’s stock has recorded some significant progress with the index gaining by about 39% between January and October 2017 as compared to -2 percent and -15% recorded during the same period in 2015 and 2016 respectively.