ABSTRACT
It is generally accepted that financial markets play a key role in the development of emerging economies. Over the past 20 years, many developing economies have experienced tremendous growth in their financial markets, as evidenced by the increased level of participation of international investors in local markets. This chapter traces the history of the Ghana Stock Exchange, its perceived benefits, its performance over the years and some criticisms levelled against stock markets in general. In the light of over two decades of operations of the Ghana Stock Exchange, the chapter examines what impact it has had on national development. The authors conclude that although the Ghana Stock Exchange has made very important strides in its 20 years of existence, its limited capital-raising capability compared with the huge financing needs of the burgeoning companies in Ghana is one of the reasons why the stock market has not met expectations in terms of its impact on the Ghanaian economy. In spite of tremendous support given by both government and development partners, the pace of development of the stock market has lagged behind other parts of the financial market, much in line with the trends in other markets. Although the potential for growth is huge, Ghana and indeed Africa’s inability to tap into this potential gives rise to the following question: ‘Is it time to re-examine current strategies and market practices?’ The authors recommend among other things that private pension plans should be encouraged to increase participation in the stock market by increasing the allowable limits for their holding in listed equities from 10 percent to 30 percent and that there is the need for greater collaboration between regulators and market participants to enhance the pace of development of the capital market industry.
