Economist Sounds Alarm: Ghana’s Capital Market Can’t Grow Without Macro Stability
Ghana’s capital market will remain shallow, underdeveloped and unattractive to investors unless government prioritises long-term macroeconomic stability over the short-term “firefighting” approach that has shaped economic policy in recent years. This is the central argument made by Economist and Senior Lecturer at the Ghana Institute of Management and Public Administration (GIMPA), Dr Raziel Obeng-Okoh, at a World Bank–sponsored seminar on the future of Ghana’s capital markets.
Dr Obeng-Okoh said Ghana’s economic volatility continues to undermine investor confidence, the most critical ingredient for capital market growth. He noted that foreign investors exited the market in 2022 when the Ghana Stock Exchange posted negative returns, adding that such shocks will keep repeating unless Ghana commits to macroeconomic discipline.
“Until we get the macro economy right, all other challenges at the micro level will worsen. We need a sustainable economic environment because its absence kills confidence. And once confidence is killed, there will be no investor interest,” he stressed.
Over-Regulation vs. Innovation
Dr Obeng-Okoh argued that Ghana must also strike the right regulatory balance. The Securities and Exchange Commission (SEC), he said, tightened rules after recent financial sector losses to protect investors. But excessive regulation can stifle innovation and discourage new issuers from listing on the stock market.
“Regulation that is too low is a problem. When it is too much, you kill innovation and growth. There has to be a clear regulatory direction,” he said.
Ghana’s limited number of issuers, lack of product diversity and low levels of financial innovation, he added, continue to constrain the market’s ability to expand.
Ghana’s Market Still “Immature” After Three Decades
Dr Obeng-Okoh revealed that Ghana’s market capitalisation-to-GDP ratio currently stands at 11%, up from 8.5% in 2022 and 9.5% in 2024. However, any country below 20% is classified as an immature capital market.
“So from the 1990s to now, Ghana is still immature. We have not had a stable macroeconomic environment that gives investors confidence to do business and go to sleep,” he said.
Slow Industrialisation Holding Back Listings
The economist also questioned Ghana’s pace of industrialisation. Globally, manufacturing and services dominate stock exchanges, accounting for about 30% and the rest, respectively. Ghana’s listing profile mirrors this trend, but he argued that the country’s industrial base remains too weak to support a vibrant market.
“If you look at the listed entities, many are in manufacturing and services. But have we really industrialised? It’s a slow one,” he observed.
A Call for Long-Term Thinking
Dr Obeng-Okoh concluded with a call for policymakers to move away from short-term fixes and commit to structural reforms that will stabilise the economy, deepen industry, expand private sector participation and create a truly functional capital market.
“We have to stop this firefighting, short-term approach. We must focus on the things that matter,” he said.
