Ghana’s Capital Market Cannot Grow Without Macro Stability – Economist Warns
By Praisebell Rosemond Larbi
Ghana’s capital market will remain shallow, volatile, and unattractive to both domestic and foreign investors unless policymakers commit to long-term macroeconomic stability instead of the short-term “firefighting” approach that has characterised the country’s economic management in recent years. This was the central warning issued by Economist and Senior Lecturer at the Ghana Institute of Management and Public Administration (GIMPA), Dr. Raziel Obeng-Okoh, during a World Bank sponsored seminar on the future of capital markets in low- and middle-income countries.
Speaking during a panel discussion on the theme “Financing Firm Growth: The Role of Capital Markets in Low- and Middle-Income Countries,” Dr. Obeng-Okoh said Ghana’s persistent economic volatility continues to erode investor confidence, an essential foundation for the growth and deepening of capital markets. He recalled that foreign investors exited the Ghana Stock Exchange (GSE) in 2022 after the market posted steep negative returns, noting that similar shocks will recur unless Ghana enforces fiscal discipline and maintains price stability.
“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 cautioned.
Over-Regulation Could Hurt Innovation
The economist further argued that Ghana must strike the right balance between investor protection and market innovation. While the Securities and Exchange Commission (SEC) tightened regulations following recent financial sector failures, Dr. Obeng-Okoh warned that excessive regulation risks stifling creativity, discouraging potential issuers, and limiting product diversity on the 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.
He noted that Ghana continues to grapple with a limited number of issuers, a narrow range of products, and low levels of financial innovation challenges that restrict the market’s ability to expand and attract new investors.
Ghana’s Capital Market Still “Immature”
Providing a broader assessment, Dr. Obeng-Okoh revealed that Ghana’s market capitalisation-to-GDP ratio, a global benchmark for market depth, stands at 11 percent, up from 8.5 percent in 2022 and 9.5 percent in 2024. However, by global classification, any market below 20 percent remains “immature.”
“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 Weakening Market Growth
Dr. Obeng-Okoh also questioned the country’s slow pace of industrialisation. Although manufacturing and services dominate listings on the GS, reflecting global trends, he noted that Ghana’s industrial base is too weak to feed a robust capital 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 stronger industrial sector, he argued, would naturally translate into more companies meeting the size, profitability, and governance requirements for listing.
A Call for Long-Term Reforms
The economist concluded with a call for policymakers to embrace structural reforms to stabilise the economy, boost industrial productivity, deepen private sector participation, and build investor confidence.
“We have to stop this firefighting, short-term approach. We must focus on the things that matter,” he urged.
According to Dr. Obeng-Okoh, without sustained macroeconomic discipline, Ghana’s capital market will struggle to evolve into the vibrant engine of long-term financing that the country urgently needs.
