As part of moves to improve the diversification of Ghana’s securities market, the Ghana Stock Exchange has announced its readiness to begin a Commercial Paper Market by the end of the third quarter of 2023.
The move will seek to provide short-term funding support for blue-chip companies with high creditworthiness.
The initiative will deepen Ghana’s securities market and improve liquidity access for economic development.
Speaking at a Breakfast Meeting which saw stakeholders in the trading and securities market deliberate on the rollout of the framework, Chief Executive Officer of Ghana Stock Exchange, Abena Amoah emphasised that a Commercial Paper Market will not only deepen the market but improve diversification.
“We have our private pension funds looking to diversify their investments. There are companies looking outside of their banks for short-term finance. So we are creating this market to bring investors to companies that need this kind of finance. “
She furthered that, the facilitation of alternative investment avenues and markets could reduce concentrated risks.
On developing the right regulatory framework to champion the smooth rollout of the programme, Managing Partner at Bentsi-Enchil, Letsa and Ankomah, Seth Asante explained that the self-regulatory system will offer a less bureaucratic process which will ease access of finance.
“The self-regulatory status is very important. Because of the short-term nature of the market, speed to market is key and we need a structure that issuers can have their instruments listed as soon as possible”.
Responding to concerns of derailed confidence on the back of the debt restructuring exercise, the Head of Investment Banking at Stanbic Bank Ghana, Kobby Bentsi-Enchill explained that the initiative will enhance market confidence.
“Asset management funds need alternative to put money to work. The market is ready, it’s up to us to put in place the regulation and let people know that these avenues exist. “
A commercial paper is an unsecured, short-term debt instrument mainly issued by corporations. For the financing of short-term liabilities such as payroll, accounts payable, and inventories.
The establishment of a Commercial Paper Market in Ghana is part of initiatives being rolled out by the Ghana Stock and Exchange, the Securities and Exchanges Commission and other relevant stakeholders to provide a good mix of both short and long-term investment avenues to serve diverse investor appetites.