The Ghana Stock Exchange (GSE) is priming three small- and medium-scale enterprises (SMEs) for eventual listing on the Ghana Alternative Exchange (GAX), otherwise known as the SME Market.

“We are on track; we have done all the preparatory work for the market. The systems are in place; we have even mobilised financial resources to support the expenses of small companies that want to go to the market,” Dr. Sam Mensah, Chairman of the GSE, who declined to name the companies, said.

“For now, the only thing that is holding back the big launch is that we are waiting for the companies to be ready, and then we will bring them out and launch the alternate market in a big way.”

Dr. Mensah said the conservative posture adopted by entrepreneurs in the country is one of the key factors holding back most SMEs from using the market to raise capital.

“It goes back to the issue of capital market or equity culture; in countries where this culture has developed over a long period of time, when entrepreneurs are looking for capital they think ‘capital market’. Here, entrepreneurs have not developed that culture so they are not used to sharing and opening up their businesses -- especially with first-generation businesses, as we are a relatively young country.”

The concept of the alternative market is to address complaints by SMEs about the stringent criteria that make it impossible to use the main stock market to raise equity for their businesses.

According to the GSE, it is looking at SMEs with a minimum stated capital of GH¢250,000 and that have been in operation for at least a year. It will also consider “greenfield” companies that have the potential to be profitable.

Ordinarily, a company should have been in operation for at least three years with a minimum stated capital of GH¢1million to qualify to list on the main exchange. And once listed, the entity is required to publish its financial statements quarterly.

For the new SME Market, listed entities will be mandated to publish their statements half-yearly. The GSE has also set up a GH¢1million revolving fund to support the listing expenses of SMEs on the proposed alternative market.

The GSE and other partners are expected to contribute to the fund. SMEs can apply for monies to meet the cost of listing. The Venture Capital Trust Fund (VCTF) has contributed US$500,000 into the fund.