Ghana’s capital markets have expanded only modestly over the past two decades even as developing economies worldwide experience dramatic deepening of equity and bond financing, according to new analysis by the International Finance Corporation (IFC).
The findings, contained in the report titled “Financing Firm Growth: The Role of Capital Markets in Low and Middle Income Countries,” highlight Ghana’s relatively sluggish performance compared to global peers and demonstrate structural barriers limiting the country’s ability to mobilize long term capital for private sector growth.
The IFC dataset, covering more than 80,000 firms worldwide including 20,000 across 106 low and middle income countries (LMICs), showed that since 1990, LMIC firms have generated over four trillion United States dollars (USD) in cumulative net capital issuance. This massive capital formation has powered investment and employment across developing economies during the period.
The report showed that financing through capital markets increased fourfold in middle income countries and eightfold in low income countries between 2000 and 2022. Stock and bond issuances by companies in low and middle income countries doubled as a share of Gross Domestic Product (GDP) during the same period, reflecting a fundamental transformation in how businesses access growth capital.
A major driver of this expansion is the sharp rise in number of firms accessing markets. More than 14,000 firms became new issuers between 2000 and 2022, broadening the investor base and accelerating capital formation across emerging economies. This democratization of capital markets has enabled thousands of companies to bypass traditional bank lending and tap equity and bond investors directly.
The report, principally authored by Césaire Assah Meh, the IFC’s Manager responsible for Macro and Market Risk, noted that financing expanded at different rates, with some countries adopting structural reforms which enabled faster and deeper market development. Policy choices proved decisive in determining which countries successfully built robust capital market ecosystems.
Against this backdrop, Ghana’s progress remains subdued. A comparative chart in the report places Ghana’s cumulative net capital issuance to GDP ratio significantly below high performing markets such as Vietnam, where issuance has climbed steadily and now far surpasses most sub Saharan African benchmarks.
By contrast, Ghana’s upward trend is gradual and relatively shallow, suggesting the country has not capitalized on global momentum that lifted capital markets in peer economies. Meanwhile, several West African neighbors including Benin, Guinea Bissau, Mali, Niger, and Burkina Faso recorded no issuances at all, showing both the region’s fragmentation and Ghana’s intermediate position.
Across Africa, the data show that equity issuance dominates bond issuance, a pattern consistent with Ghana’s market structure. Sub Saharan Africa relies heavily on domestic investors, with 72 percent of issuance during the 1990s and more than half between 2010 and 2022 raised locally rather than internationally.
This aligns with Ghana’s dependence on domestic pension funds, insurance firms, and banks to support corporate activity, even as foreign participation remains volatile. The heavy reliance on domestic capital pools means Ghana’s market depth is constrained by local savings rates and institutional investor capacity.
Despite this structural alignment, Ghana has not matched the scale of growth recorded elsewhere. The Ghana Stock Exchange (GSE) lists just 36 companies, with low turnover ratios and limited new listings. Trading activity remains thin, with many listed firms experiencing minimal daily transactions.
The corporate bond market, though more active in recent years, remains narrow, with issuance still dominated by a small number of financial institutions. As at the end of October 2025, there were eight corporate issuances with total outstanding value of 8.38 billion cedis compared to 265.8 billion cedis in Treasury outstandings, illustrating the overwhelming dominance of government securities.
The report’s emphasis on cumulative net issuance, which subtracts maturing bonds and excludes refinancing, offers a clearer picture of Ghana’s limited progress in generating fresh, growth oriented capital. This methodology reveals that much of Ghana’s apparent bond market activity represents rollover of existing debt rather than new capital formation.
In contrast, the report highlighted policy shifts that have accelerated capital market development in other regions. Countries that reformed pension systems to create mandatory or quasi mandatory individually funded schemes saw sharp increases in domestic issuance within four years, with some economies experiencing nearly fivefold growth in capital market activity.
Similarly, economies that strengthened investor protection, modernized disclosure regulations, or expanded sovereign bond markets demonstrated higher levels of corporate financing and deeper liquidity. These reforms created virtuous cycles where improved infrastructure attracted more issuers and investors, further deepening markets.
Economic growth itself accounts for nearly half of the variation in capital market depth across LMICs, according to IFC analysis. Faster growing economies naturally see more corporate expansion and investment demand, which translates into higher capital raising activity if supporting infrastructure exists.
Ghana’s own experience has been shaped by macroeconomic instability, exchange rate fluctuations, and legacy effects of the 2023 domestic debt restructuring, all factors that have suppressed investor appetite and tightened balance sheets. The Domestic Debt Exchange Programme (DDEP) particularly damaged confidence among domestic institutional investors who suffered significant losses.
Meanwhile, businesses continue to rely heavily on bank lending despite interest rates that have frequently exceeded 30 percent in recent years. High borrowing costs make capital intensive investments prohibitively expensive for many firms, limiting growth and job creation potential.
IFC’s findings underscore the scale of work needed to reposition Ghana’s capital markets as a credible engine of long term financing. Deeper equity and bond markets could support productivity, job creation, and private sector expansion, but only if supported by sustained reforms, improved macroeconomic fundamentals, and more predictable investment conditions.
Meh emphasized these points during a presentation at the World Bank’s Head Office in Accra, where he outlined policy recommendations for strengthening Ghana’s capital market infrastructure. He stressed that piecemeal reforms would prove insufficient, calling instead for comprehensive strategies addressing multiple constraints simultaneously.
This report comes as the GSE has not witnessed an Initial Public Offering (IPO) since MTN Ghana’s 2018 entry, the most recent major listing that briefly energized the exchange. However, the market is anticipating two listings in the financial and manufacturing segments, even though listing of State Owned Enterprises (SOEs) continues to remain elusive.
The government has repeatedly pledged to list SOEs including Ghana Commercial Bank, Tema Oil Refinery, and other major state enterprises, but these commitments have not materialized. Political resistance, valuation challenges, and concerns about losing control have stalled the privatization agenda.
The debt market’s heavy skew toward government securities reflects Ghana’s large fiscal deficits and public sector borrowing requirements that crowd out private issuers. With government offering risk free returns exceeding 20 percent on Treasury bills and bonds in many periods, corporate borrowers struggle to attract investor interest at competitive rates.
The IFC report noted that access to capital is vital for business growth, with IFC Managing Director Makhtar Diop emphasizing that equity and bond markets foster growth in developing economies by contributing trillions in capital and generating substantial employment over three decades. Firms that successfully access capital markets invest more, expand faster, and create more jobs than comparable bank dependent competitors.
Analysis of employment data showed that firms raising capital through markets generated approximately five percent more jobs over time compared to similar firms relying solely on bank financing. This job creation premium reflects both direct hiring by capital market issuers and indirect employment through their expanded supplier networks and customer bases.
The report underscores the importance of sound economic policies and financial reforms in deepening domestic capital markets. The transition to prefunded pension systems has been associated with nearly fivefold increases in domestic issuance activity in the years following reform, as pension fund managers seek higher yielding investments beyond government securities.
These insights provide a roadmap for policymakers and investors looking to harness the potential of capital markets to drive growth and job creation. Ghana’s authorities face choices about whether to prioritize capital market reforms amid competing demands for scarce policy attention and implementation capacity.
Part of the IFC Research Series, the publication was made possible through financial support from the Government of Luxembourg through the World Bank Group’s Joint Capital Markets Program (J CAP). The research represents one of the most comprehensive global analyses of capital market development in emerging economies.
Industry stakeholders in Ghana have called for regulatory reforms to revive the capital markets, including streamlining listing requirements, strengthening corporate governance standards, and providing tax incentives for equity investors. Some proposals suggest establishing a growth board for small and medium enterprises seeking to raise capital without meeting full exchange requirements.
The Securities and Exchange Commission (SEC) has indicated willingness to modernize regulations but faces resource constraints and capacity limitations. Recent leadership changes at both SEC and the Ghana Stock Exchange have raised hopes for fresh approaches to longstanding challenges.
International comparisons highlight opportunities for Ghana to learn from successful peers. Vietnam’s rapid capital market expansion stemmed from comprehensive reforms including pension system restructuring, foreign investor access improvements, and aggressive SOE listing programs. Kenya similarly transformed its capital markets through regulatory modernization and regional integration initiatives.
Whether Ghana can reverse its lackluster capital market performance depends on political will to implement comprehensive reforms, macroeconomic stability to restore investor confidence, and institutional capacity to enforce modern regulatory standards. The IFC report suggests the potential rewards justify the effort, but only if authorities commit to sustained implementation beyond electoral cycles.
The findings also carry implications for Ghana’s broader development agenda. Without functioning capital markets channeling long term financing to productive enterprises, the country risks continued dependence on expensive bank credit and volatile foreign capital flows. This financial architecture constrains industrialization ambitions and limits job creation potential.
President John Dramani Mahama’s administration has prioritized economic transformation and private sector development in its policy framework. Reviving capital markets could prove instrumental to these objectives by mobilizing domestic savings for infrastructure, manufacturing, and service sector expansion.