The Head of Trading, Global Markets at Absa Bank Ghana Limited, Andrews Akoto, has urged businesses in Ghana, particularly those in the manufacturing sector, to explore the capital market as a source of long-term financing for expansion.
According to him, traditional bank loans are often unsuitable for businesses seeking to establish factories and undertake major expansion projects because they typically require patient, long-term capital.
Speaking on the Channel One TV Quarterly Economic Review on the mid-year performance of the Ghanaian economy on Thursday, July 9, Akoto said businesses must consider alternative financing options available through Ghana’s capital market.
“The kind of capital that these businesses need is long-term capital, and traditional bank loans are not fit for purpose for that kind of expansion,” he said.
He noted that the capital market provides businesses with an opportunity to raise patient capital, which can support the establishment of factories and large-scale investments.
Akoto highlighted that Ghana’s capital market has continued to provide opportunities for businesses despite recent economic challenges, including the country’s debt restructuring programme.
He explained that some Ghanaian companies were able to raise funds through the debt capital market during the economic crisis, with some securing financing at rates lower than government borrowing levels.
“During the heat of the crisis in 2022 and the restructuring in 2023, you would think that investor capital would not invest. But there were businesses in Ghana that were able to raise capital in the debt capital market through bonds at cheaper rates than the government levels,” he stated.
However, he added that businesses seeking capital market funding must strengthen their corporate governance structures and be prepared to operate with greater transparency due to increased public scrutiny.
“The other side of that is really structuring your business well, corporate governance, being ready to expose that business to public scrutiny because you are accessing capital from the public markets,” he added.