IFC, World Bank Says Ghana Can Revive Capital Market Growth
By: Solomon Nartey Tetteh
The World Bank and International Finance Corporation (IFC) has noted that Ghana has a strong opportunity to revive capital market growth if current economic improvements such as easing inflation and declining interest rates are sustained.
Speaking at the World Bank seminar on Financing Firm Growth and the Role of Capital Markets, Manager at the International Finance Corporation (IFC), Cesaire A. Meh presented comparative data on capital market performance in Ghana, sub-Saharan Africa and Vietnam, highlighting both past gains and recent setbacks in Ghana’s case.
He explained that Ghana experienced a sharp rise in capital market financing as a share of GDP in the early 2000s, driven largely by economic reforms and favourable conditions that expanded access for issuers.
“During that time, the economy was doing well, reforms were strong, and you saw higher cumulative net issuance,” he said.
However, capital market activity later weakened as inflation surged and macroeconomic conditions deteriorated. In contrast, Vietnam facing similar early patterns continued to build momentum and sustain growth in capital market financing.
Mr. Meh noted that current signs of recovery in Ghana’s economy may provide a chance to rebuild capital market depth.
“Inflation is getting lower, interest rates are getting lower. This means we could potentially replicate the earlier period of strong expansion, or even go higher, depending on how conditions evolve,” he said.
He revealed that most capital market financing in Ghana and many low-income countries comes from domestic sources rather than international markets. Between 2010 and 2022, about 71% of capital raised came from domestic issuances. A similar trend was observed in South Africa, where over 60% of issuances were domestic.
Another important shift, he said, is the rise of new issuers. By 2022, 61% of total capital market financing in low-income countries came from firms entering the market for the first time compared to only 42% in high-income countries.
“These newer firms are younger, smaller and typically issue smaller amounts, but they are also more productive,” Mr. Meh explained.
He added that such firms tend to be financially constrained, which makes their participation in capital markets critical for real economic growth.
Mr. Meh emphasised that the impact of capital market financing depends heavily on how firms use the funds they raise. While some firms may use capital inefficiently such as paying down expensive debt or accumulating cash the data show that many firms in low-income countries direct the funds into productive investment.
He said this pattern demonstrates that strong capital markets can play a pivotal role in supporting firm expansion, increasing productivity and driving broader economic growth.
Mr. Meh highlighted that Ghana stands to benefit significantly if it strengthens market access for younger, productive firms and capitalises on its improving macroeconomic environment.
