GSE Listings: Multinationals need incentives, not coercion to list

Incentives, not coercion, are a better way of getting multinationals operating in the country to list on the Ghana Stock Exchange (GSE), two of Ghana’s distinguished citizens have stated.

They are the Chief Executive Officer of the Telecoms Chamber Kwaku Sakyi-Addo, and Mr. Ken Ofori-Atta, Chairman of the Databank Group

Mr.Sakyi-Addo whose industry has been targetted by proponents of this local content policy for the stock exchange, has warned of the consequences of coercing companies to list. He spoke with the B&FT in interview during a courtesy call on the newspaper’s editorial team.

“We should be careful not to give signals that could be interpreted as compelling telcos or any multinational to list. You ought to be careful about using compulsion when you are dealing with investments.

“I think what is preferable is incentives. If you want to drive companies toward a certain direction, you use incentives rather than compulsion. Once you provide the incentives, you leave them to take their business decisions. If it's good business case, they will go for it. When we use compulsion, we will end up driving away investments.”

Amid complaints that not a single telecoms company is listed on the GSE, Mr. Sakyi-Addo said there's a false impression out there that telecom companies are making windfall profits, hence people want to have a stake in them.

“We must be careful about creating the impression that once you invest in a company that is listed you’ll be able to make profit. There are many listed companies that are not paying any dividends to shareholders.

“We have to realise that in business you don’t only have an upside; there's also a downside.”

Mr. Adu Anane Antwi, Director-General of the Securities and Exchange Commission (SEC), has been leading calls for government to make the licencing of multinationals in certain critical sectors contingent on their agreement to list on the local stock exchange after a set number of years in operation.

“Let us make it a policy to include it in our agreements, so if you are coming for a licence to operate in some specific sectors -- whether banking, insurance, oil or mining -- you sign on the understanding that: ‘I am going for this licence and after five years I am prepared to float about 15 or 20 percent on the GSE’. Then it becomes part of the licencing requirement that you have signed on to. That is not law: it’s an agreement between two consenting entities,” he said recently at the Ghana Economic Forum in Accra.

But reacting to the proposition in an interview with the B&FT, Mr.Ofori-Atta, stated: “There are way to do it without coercion. Some of these include a sound macro-economic system, ability to transfer their proceeds outside easily, and some tax-breaks which could encourage them to do that.”

Government already provides a tax incentive in the form of a reduced corporate tax rate of 22 percent for listed companies. The general rate is 25 percent. But Mr. Ofori-Atta said perhaps more can be done to encourage more businesses to consider listing.

He noted that looking at the liberal environment in which businesses operate in the country, coercion is difficult; but the government and its regulatory bodies can create an environment which leads to the companies’ interest being fulfilled by getting listed.

By Bernard Yaw Ashiadey & Richard Annerquaye Abbey