SME FINANCING: INVESTIGATING WHY THE GHANA ALTERNATIVE STOCK MARKET (GAX) HAS NOT ATTRACTED LISTINGS

Abstract Ghana Alternative Exchange (GAX) is an equity finance program established to help SMEs and start-up businesses with the potential of growing to raise capital at a lower cost from the public. The managing director of the Ghana Stock Exchange in an interview with XYZ Business said that he expected the first and second companies that have shown interest in the GAX to list by the end of the first quarter of 2014. However, there has not been a single listing onto the market eleven months after the program was launched. The purpose of this study was to investigate why the Ghana Alternative Stock Market (GAX) has not attracted listings after its launch on 13th May, 2013. The study used content analysis to understand the purpose for which the GAX was established after interviewing two officials of the GAX. Questionnaires were also administered to SME owners and operators to discover their willingness to list on the market for a successful running of the GAX. The evidence suggests that SME operators are unwilling to go public and share ownership of their business with 20 other people. Secondly, they are not motivated and have low confidence in the market. As a result they are not ready to incur the risks that come with gong public and listing on the market. To motivate and attract SMEs to list on the GAX, GAX officials should reach the SMEs through the National Board for Small Scale Industries (NBSSI). They should also employ the use of billboard and TV adverts to reach large number of their target market and also to make the spread of information faster and easier.