Domestic capital market issuance lags behind global peers – IFC report

A News Desk Report

The local capital markets have expanded only modestly over the past two decades even as developing economies worldwide experience a dramatic deepening of equity and bond financing, according to a new analysis by the International Finance Corporation (IFC).

The findings, contained in the report ‘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 demonstrated structural barriers limiting the country’s ability to mobilise 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 US$4trillion in cumulative net capital issuance.

The report showed that financing through capital markets increased four-fold in middle-income countries and eight-fold in low-income countries between 2000 and 2022.

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.

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.

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. Meanwhile, several West African neighbours – 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.

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. The corporate bond market – though more active in recent years – remains narrow, with issuance still dominated by a small number of financial institutions.

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.

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.

Similarly, economies that strengthened investor protection, modernised disclosure regulations or expanded sovereign bond markets demonstrated higher levels of corporate financing and deeper liquidity. Economic growth itself accounts for nearly half of the variation in capital market depth across LMICs.

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, Mr. Meh notes.

Meanwhile, businesses continue to rely heavily on bank lending, despite interest rates that have frequently exceeded 30 percent in recent years.

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,” the IFC Manager said during a presentation at the World Bank’s Head Office in Accra.

This report comes as the GSE has not witnessed an Initial Public Offer (IPO) since MTN’s 2018 entry. However, the market is anticipating two listings in the financial and manufacturing segments, even though listing of State Owned Enterprises continues to remain elusive.

Similarly, the debt market is heavily skewed toward government securities. As at the end of October 2025, there were eight corporate issuances with total outstanding value GH¢8.38billion compared to GH¢265.8billion in Treasury outstandings.

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