SMEs need an alternative capital market - Investment Banker
The head of Investment Banking at Stanbic Bank Ghana, Kobby Bentsi-Enchil, has advocated the development of an alternative capital market for small businesses to enable them raise adequate financing for business growth.
Speaking at the opening of the two-day West Africa Capital Market Conference (WACMaC) in Accra, on the topic: “Access to finance via cross-border listings on stock and fixed income exchange”, he said the intervention could be key in addressing the inadequacy of attractive instruments for small businesses in the West African sub-region.
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“Small businesses are unable to list on local bourses due to inherent challenges. Small businesses are confronted with challenges such as corporate governance and compliance, perceived high credit risk, inadequate or incomplete business disclosures and unclear growth strategies.
However, providing options for second and third tier alternative market board listings with relaxed listing requirements, including entry barriers and disclosure requirements could be an incentive for local businesses to list on bourses,” he said.
Mr Bentsi-Enchil also elaborated on some of the reasons for the hesitancy of foreign capital inflow into domestic markets in West Africa.
He mentioned unattractive returns on investments, capital controls and convertibility risks, lack of robust continuing disclosure standards, limited access to current real time information and relative illiquidity in the secondary markets as some of the main reasons for the hesitancy in foreign capital inflow.
In addressing the challenges confronting West Africa’s capital markets, Mr Bentsi-Enchil advocated for collaboration among key stakeholders across the various countries.
According to him, “Collaboration and collaborative efforts are critical to improving access to finance. There has to be coordinated efforts between Ministries of Finance within jurisdictions to encourage potential issuers to pursue cross-border listings. Member countries should also consider increased collaboration on issuer solicitation, information sharing, regulation and reporting standards as well as concessions on fees and levies.”
“There is also the need for regional bourses to explore collaboration with multilateral institutions and global stock exchanges while engaging in consistent investor education to enumerate benefits of investing in cross border listing. Also, leveraging the benefit of AfCFTA’s Pan-African Payment and Settlement System (PAPPS) is one key tool that could facilitate regional integration,” he added.
Conference
The two-day conference is being organised by the West African Securities Regulators Association (WASRA).
WASRA is the regional body for Capital Market Regulators in West Africa with the mandate of facilitating cooperation and consultation among capital markets in the West African region.
The event, which is being held under the theme: “Deepening and strengthening the capital markets across West Africa through effective regulation”, brings together relevant stakeholders and experts, including regulatory agencies, market operators, inter-regional economic bodies, academics, among others, to share experiences and deliberate on best practices to improve West Africa’s Capital Markets. WACMaC is a biennial event that seeks to present the West African region, and indeed Africa as a whole, the opportunity to address important issues related to the orderly growth and development of the regional and continental capital markets.