This paper reviews trends in GDP and other macroeconomic variables since independence. It assesses the performance of the different sectors of the economy and expenditure categories. The paper identifies a number of products that could contribute to maintaining the high growth rate that nontraditional exports have experienced. The medium-term fiscal sustainability analysis provides a useful quantification of the impact of the shocks experienced on fiscal performance. Ghana's social insurance system, stock exchange, divestiture program, rural finance, and poverty are also discussed.


This paper reviews trends in GDP and other macroeconomic variables since independence. It assesses the performance of the different sectors of the economy and expenditure categories. The paper identifies a number of products that could contribute to maintaining the high growth rate that nontraditional exports have experienced. The medium-term fiscal sustainability analysis provides a useful quantification of the impact of the shocks experienced on fiscal performance. Ghana's social insurance system, stock exchange, divestiture program, rural finance, and poverty are also discussed.

V. Stock Exchange37

A. Introduction

137. The incorporation of the stock exchange in Ghana in November 1990 was part of the structural reforms initiated in the mid-1980s. As in many other developing countries, the financial system in Ghana at the end of the 1980s consisted essentially of the banking sector with most banks owned by the state. The presence of a stock exchange was seen as increasing the possibilities for portfolio diversification, therefore raising financial savings and contributing to capital formation. The stock exchange was also seen as a way to accelerate the privatization program by creating a mechanism through which Ghanaian investors could participate in the ownership of large enterprises.

138. This paper describes the organization of the Ghana Stock Exchange (GSE) and explains its role in deepening the financial system.

B. Background

139. The GSE has no shareholders but is incorporated as a public company limited by guarantee.2 It is governed by a council comprising representatives from the licensed dealing members, listed companies, banks, insurance companies, money market participants, and the general public.

140. The GSE has two categories of members: licensed dealing members (LDMs) and associate members. An LDM is a corporate body licensed by the stock exchange to deal with listed companies. An associate member is an individual or corporate body that has satisfied the GSE’s membership requirement but is not licensed to deal in securities. There is no fixed capital requirement for LDMs, but their stated capital is expected to be at least 100 million (about US$40,000, as of June 1999). The firm must be licensed by the Securities Regulatory Commission and must be in possession of a certificate of specification before commencing operations. LDMs must also be approved by the GSE. Currently, 12 LDMs operate on the GSE. All of them are allowed to serve nonresidents.

141. All types of securities can be listed on the GSE. Criteria for listing include capital adequacy, profitability, years of existence, and management efficiency. All listings are included in the GSE All-Share Index. There are currently 22 equities listed (see Appendix I). There are also four dollar-denominated corporate bonds.

142. Ordinary shares and corporate bonds are traded three times a week, on Mondays, Wednesdays, and Fridays, between 10:00 a.m. and 12 noon. Shares of Ashanti Goldfields are also traded over the counter after GSE trading hours, with these trades reported to the GSE at the next trading session (Box 4). Delivery and settlement are centralized but not yet automated, with a settlement period of T + 5 days. However, the GSE is setting up an automated clearing, settlement, and depository system that should reduce the settlement period to T + 3 days.

Ashanti Goldfields Company

Ashanti Goldfields Company Ltd. (AGO) is the largest sub-Saharan African company outside of South Africa and the leading company in the Ghanaian mining industry. Ashanti used to account for 90 percent of Ghanaian production of gold, but its dominance has been eroded by other mines, which accounted for about 37 percent of Ghana’s estimated gold production of approximately 53,500 kilograms in 1997. The company has 10,000 employees.

The AGC was once owned by the Ghanaian government (55 percent stake) and the U.K. conglomerate Lonrho Plc. (45 percent), but the ownership structure changed in 1994 when a portion of its shares was floated on the London and Accra stock exchanges, leaving the government with about 29 percent. In February 1996, the AGC became the first African company to be listed on the New York Stock Exchange after the Ghanaian government’s decision to sell part of its shares in the company, equivalent to 6 percent of total equity, for US$100 million to a group of international pension funds. Currently, AGC is also listed on the Australian, Toronto, and Zimbabwe stock exchanges. There are plans to further reduce government shareholding to 20 percent through the sale of a further 2 percent of equity.

There seems to be a possibility of arbitrage between AGC shares on the GSE and other stock exchanges. For example, since its listing on the Zimbabwe Stock Exchange in May 1996, those shares have traded at a discount to the prices on other stock exchanges. This was due in part to the small number of Ashanti shares on the Zimbabwean register, which made its stock relatively difficult to trade on the local stock exchange. Ashanti has about 900,000 shares quoted on the Zimbabwe exchange, out of a total 90.3 million shares issued.

143. All investors are subject to a 10 percent withholding tax on dividend income, although they are exempt until November 2005 from the tax on capital gains on securities listed.

144. Initially, nonresidents could not trade on the GSE, but the situation was substantially liberalized in 1994. Nonresident investors can now deal in securities listed on the GSE without obtaining prior permission, although there are some restrictions on foreign portfolio investors not resident in Ghana. There are no exchange controls on the remittance of original investment capital, capital gains, dividends, interest payments, returns, and other related earnings. The current limits on nonresident investor holdings (institutional or individual) are as follows: a single investor (non-Ghanaian who lives outside the country) is allowed to hold up to 10 percent of the equity of each stock issued; and foreign investors in aggregate may hold up to a cumulative total of 74 percent of the equity in any stock issue (in special circumstances, this limit may be waived). These limits exclude trade in Ashanti Goldfields shares.

C. Overview of the Present Situation

145. Since its establishment, the GSE’s performance has varied considerably (Table 17 and Figure 17). In 1993, the GSE was the sixth-best performer among emerging stock markets with a capital appreciation of 116 percent. In the following year, the GSE was the best-performing stock market among all emerging markets, as its index rose by 124 percent. Market capitalization also increased markedly owing to the flotation of Ashanti Goldfields Company and the government’s sale of 20 percent of its then 55 percent stake in the company. In 1995, however, the GSE index increased by a meager 6.3 percent, in part because of the high inflation and interest rates during that period. There was progressively stronger growth over the next three years, with the GSE index increasing by 70 percent (63 percent in dollar terms) in 1998, making it the best-performing market in Africa (Table 18).

Table 17.

GSE Performance Statistics

article image
Sources: IFS, IFC, and GSE.
Figure 17.
Figure 17.

Stock Exchange Indicators, 1990–1998

Citation: IMF Staff Country Reports 2000, 002; 10.5089/9781451814811.002.A005

Sources: IFS; IFC and GSE.
Table 18.

Africa: Performance of Stock Exchanges

(As of December 31, 1998)

article image
Sources: IFSE and Standard Bank.

146. In terms of market capitalization, which measured about US$1.4 billion at the end of 1998, the GSE has become one of the largest sub-Saharan stock exchanges. Ashanti Goldfields Company (AGC) is by far the most important stock on the exchange. Since its flotation in 1994, the capitalization of AGC has represented more than 70 percent of the market total on average. It thus heavily influences the key market figures for the rest of the stock market.38

147. Besides the AGC, the manufacturing and brewing sectors dominate the GSE (Appendix I). A distant third is the banking sector, with most other listed companies in the insurance, mining, and oil sectors. Many of the listed companies on the GSE are Ghanaian-owned subsidiaries of multinational companies.

148. The expansion of the stock market has been driven to a large extent by privatization, as most companies on the GSE were originally state corporations. After the flotation of AGC shares in 1994, the sale of the state stake in the Social Security Bank boosted the market, as well as the flotation of part of the Ghana Commercial Bank shares that belonged to government. Pioneer Aluminum Factory and Aluworks were among other large companies privatized during 1995–98.

149. However, the expansion caused by privatization has not been matched by private firms seeking long-term capital from the market. The GSE’s management tried to change this in 1998 by embarking on a massive media advertising campaign to educate the public on the advantages of investing; nevertheless, the results of this campaign have not been significant so far.

D. Conclusion

150. Since its establishment in 1990, the GSE has been progressively strengthening its facilities for businesses and government to raise long-term capital as well as for investors to obtain liquidity, reasonable capital safety and diversity of investments. Even though it is still a relatively young stock exchange, it is progressing faster than most of the African stock exchanges and is receiving significant attention by international media.39

151. Despite some significant achievements (liberalization of exchange controls, contribution to successful privatization of enterprises, etc.) the GSE remains fairly illiquid like many other African markets. In 1998, the turnover rate was just 4 percent, the value of traded shares was up by 47 percent from the previous year, but it mainly reflected higher share prices while volume traded declined by 25 percent.

152. Finally, the GSE needs to rely more on domestic investors. The Ghanaian authorities plan to develop domestic mutual funds and unit trusts, which would reduce the volatility of the market and make it less dependant on foreign investors. A draft law on domestic mutual funds and unit trusts is expected to be put before parliament in the near future. Stable macroeconomic conditions and the creation of an adequate regulatory framework are key for the continued success of the capital market.


  • AED, 1995, “Ghana: An AED Special Report,” Africa Economic Digest, 16: 9-32.

  • Dotchévi, Pascal, 1998, “Ghana: L’Envol de la Bourse d’Accra,” Jeune Afrique Economie, October, 272: 69-71.

  • Ghana Stock Exchange, 1998, Fact Book 1998.


Companies listed on GSE

  1. ABL - Accra Brewing Ltd.

  2. AGC - Ashanti Goldfields Company Ltd.

  3. ALW - Aluworks

  4. CFAO - French Company for West Africa

  5. EIC - Enterprise Insurance Co. Ltd.

  6. FML - Fan Milk Ltd.

  7. GCB - Ghana Commercial Bank Ltd.

  8. GGL - Guinness Ghana Ltd.

  9. HFC - Home Finance Company Ltd.

  10. KBL - Kumasi Brewery Ltd.

  11. MGL - Metalloplastica (GH) Ltd.

  12. MLC - Mechanical Lloyd Co. Ltd.

  13. MOCL - Mobil Oil Ghana Ltd.

  14. PAF - Pioneer Aluminum Factory Ltd.

  15. PTC - Pioneer Tobacco Company Ltd.

  16. PZ - Paterson Zochonis Gh. Ltd.

  17. SCB - Standard Chartered Bank

  18. SPPC - Super Paper Products Company Ltd.

  19. SSB - Social Security Bank

  20. UNIL - Unilever Ghana Ltd.

  21. UTC_E-UTC Estates

  22. CMLT - Camelot


  1. HFC Housebonds Series A

  2. HFC Housebonds Series B

  3. HFC Housebonds Series C

  4. HFC Housebonds Series D


Prepared by Vassili Prokopenko.


That is, the GSE is a not-for-profit organization.


For example, in June 1995, the GSE Index was trading at a price/earnings ratio of 20, however, excluding Ashanti, this figure dropped to 10. Similarly, the average GSE dividend yield with Ashanti was 1.02 percent but without Ashanti was 6.33 percent (AED, 1995).


It has received coverage by most of the major electronic and print media specializing in global financial news. The GSE is also on the internet, and contact can be made through e-mail.

Ghana: Selected Issues
Author: International Monetary Fund