Home   >   Markets   >   201306   >   AGI wants tax breaks for businesses on GAX

AGI wants tax breaks for businesses on GAX
Posted on: 12-Jun-2013         Source: Daily Graphic
The Association of Ghana Industries (AGI) has stressed the need for the Ministry of Finance to introduce tax breaks for companies that would list on the Ghana Alternative Market (GAX).

The move, the association believes would help entice more businesses to list on the exchange.

The Vice President of AGI, Mr Samuel Appenteng said the introduction of the GAX is expected to end the challenges associted with access to that often hamper the growth and expansion of indigenous enterprises.

The GAX is a new market initiated by the Ghana Stock Exchange (GSE) for micro, small and medium scale enterprises with promising prospects for growth.

Its listing requirements are milder compared to those pertaining to the GSE and is aimed at giving the target market access to long term yet stable capital for growth.

Although the market is yet to be launched, having been delayed due to the absence of a pioneering company, the Vice President of AGI in-charge of the small scale division said GAX could just be the best solution to industry’s long running twin devils of access to and cost of credit.

“The GAX, to me, is a major opportunity for indigenous businesses to raise capital virtually for free,” Mr Appenteng who doubles as the Chairman of the Governmening Council of GAX, told the GRAPHIC BUSINESS in Accra on the side-lines of a business luncheon between management of the GSE and members of the AGI.

“I think that market, which is mainly for SMEs, will do away with this thing of businesses not being able to expand because there are no readily available funds,” he added.

The business luncheon, which was at the instance of the GSE, was to enable the exchange explain the nitty-gritties sorrounding the operations of GAX to members of AGI and also get their concerns regarding on the market.

Notwithstanding the positive impacts of GAX on indigenous businesses, Mr Appenteng observed that the Ghanaian attitude of always wanting to be the sole owners of businesses could deter people listing their businesses on the new market; an observation the deputy Managing Director of GSE, Mr Ekow Afedzie, said has long been a challenge to the local bourse itself.

“We have done all that we can to get companies to list on the exchange but we still have just 34 companies. That should tell you that most people don’t want to share their businesses,” he said in interview.

A company that lists on the GAX as well as on any other bourse subsequently opens its ownership to other individuals and institutions in that interested investors will buy its shares.

“It’s true that most Ghanaian entrepreneurs often want to be the sole owners of their businesses and that, to me, is understandable.”

“When people establish businesses, they have some emotions attached to them and to allow others in is always difficult,” Mr Appenteng said.

That notwithstanding, he explained that such emotions needed to be shelved to enable local entrepreneurs access stable yet cheaper funds through the alternative market to enable them grow and expand their reach.

On whether or not GAX will be launched anytime soon, given the postponements that rocked earlier launch dates, the Managing Director of GSE, Mr Kofi Yamoah, stressed that it will be done this year.

“It’s a gradual process and we are taking it one step at a time. We have spoken to a couple of companies and they have expressed interest so once the modalities are formalised, then we can launch with our first listing,” Mr Yamoah said.

Unlike the main bourse, companies wishing to list on the GAX will have access to some funds to cover the costs of listing. Also, such companies need not necessarily be making profit making but their public float – the per centage of the company’s stake to be listed – shall be at least 25 per cent, among others.