Governmental body affirmates Small and Medium Enterprises (SMEs) can leverage Government Assistance eXchange (GAX) as a viable solution

Governmental body affirmates Small and Medium Enterprises (SMEs) can leverage Government Assistance eXchange (GAX) as a viable solution

The Ghana Stock Exchange (GSE) emphasizes the Ghana Alternative Market (GAX) as a viable option for small and medium enterprises (SMEs) to secure growth capital at a reduced cost. Established in 2013, the GAX has listed six companies, catering to SMEs with less stringent listing requirements and regulations compared to the main board.

At a recent Money Summit organized by the B&FT, David Tetteh, a technical consultant for the GSE, highlighted the potential benefits of the GAX for businesses aiming to raise equity capital. He stressed that the GAX offers an opportunity for companies to secure funding, sometimes even before applying for debt from banks.

To address concerns about the costs of the listing process, the GSE has introduced the Listing Support Fund in April 2018. This fund allows for deferred payment of the initial listing cost and provides companies with advisory services during the listing process. This means that companies seeking to raise funds on the GAX do not need to incur upfront costs.

Unlike the main board, which requires a minimum stated capital of GH¢1million, the GAX only asks for GH¢250,000 and does not demand proof of profitability before listing. This adjustment aims to attract SMEs that might have felt intimidated by the main board's requirements.

As for GAX's recent performance, four out of the six listed companies have remained unchanged in price over the past 12 months, with one gainer and one laggard. Pesewa One has seen a 4.62 percent increase in price, while Intravenous Infusions Limited has recorded a 20 percent drop. The remaining companies, Samba Foods, Meridian Marshall Holdings, Hords Ltd. GH, and DigiCut Production & Advertising Limited, have experienced no significant changes in price.

As the GSE continues to revise the rules for the GAX and lower compliance requirements, there is hope that more SMEs will be encouraged to list on the platform. For entrepreneurs seeking equity capital without incurring high costs, the GAX represents a promising opportunity to tap into the investment pool and drive their business growth.

1. At the Money Summit, David Tetteh discussed the potential benefits of the Ghana Alternative Market (GAX) for businesses aiming to raise equity capital, highlighting the opportunity it offers for companies to secure funding even before applying for bank debt.
2. To address concerns about the costs of the listing process, the Ghana Stock Exchange (GSE) has introduced the Listing Support Fund, which allows for deferred payment of the initial listing cost and provides advisory services during the listing process.
3. Unlike the main board, the GAX only requires a minimum stated capital of GH¢250,000 and does not demand proof of profitability before listing, aiming to attract SMEs that might have felt intimidated by the main board's requirements.
4. According to a report, four out of the six listed companies on the GAX have remained unchanged in price over the past 12 months, with Pesewa One seeing a 4.62 percent increase and Intravenous Infusions Limited recording a 20 percent drop.

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