To boost activity on the stock market, relieve the cedi of some pressure, and reduce the opaqueness with which they operate in the country, multinationals must be forced to list on the Ghana Stock Exchange, Kojo Addae-Mensah, Managing Director of Databank, has said.
“We cannot just allow them to come in, operate, make a profit, take dollars out, put pressure on the local currency, depreciate it and yet still Ghanaians do not participate. I do not quite agree to that,” he said.
For the past decade, the former Director General of the Securities and Exchange Commission (SEC), the sector’s regulator, Dr. Adu Anane Antwi, has been leading a lone campaign to urge multinationals to list so that Ghanaians can also share in their success and reduce the menace of capital flight.
“I have said that one of the challenges that we face even with our currency is the amount of dividends that flow out of the country every year,” Dr Anane Antwi said sometime last year.
“If we get some of these companies list part of their shares on the Ghana Stock Exchange, at least part of the foreign exchange that they take every year in terms of dividends will remain here and that should help us manage our foreign exchange value and rate.”
With relaxed laws, which allow them to repatriate 100 percent of their profits, the economy is literally at the mercy of multinationals which also tend to enjoy generous tax breaks.
Courage, Kojo Addae-Mensah reckons, is required at the political level to ensure a lot more of the value of multinationals remains in the struggling economy.
“The president or the ministry of finance can push it through a bill that goes to parliament and makes it law that as a multinational, if you operate in the country for six or seven years, in your 10th year, you must list a minimum of 20 percent of your company on the local bourse,” he said.
With the Ministry of Finance currently looking at how to develop the capital market, one of the ways is to insert clauses in contracts that will force these multinationals to go public after a period, he said.
“It is not about losing control. AngloGold Ashanti Limited, a South African-based multinational operating in 11 countries, never lost control after offloading minority shares on the local bourse.
We just want Ghanaians to feel a part of it and get the stock market going with some liquidity. It helps everybody and helps the company itself because when you want to expand and retool, you can raise it from Ghanaians,” he said.
Out of the 41 listed companies, only 13, representing 31.7percent, are multinational in nature, with another five locally listed ones with majority foreign interest or stake. The rest of the 23, representing 56.1percent are local firms.
The case of Nigeria
Nigeria’s politicians are contemplating passing laws and regulations to coerce multinationals in the telecoms, oil and gas and banking sectors to list on the Nigeria Stock Exchange (NSE) to deepen the market.
The speaker of Nigeria’s House of Representatives, Yakubu Dogara, indicated, last year, that as part of plans to deepen the capital market, “lawmakers could pass laws to compel multinational oil and gas companies as well as telecommunication firms doing business in Nigeria to list on the NSE.”
Last year, lawmakers in Africa’s largest economy forced MTN Nigeria to list on the bourse as part of an agreement with the government to settle a protracted sim card dispute. The listing is part of a deal that now sees the telco agree to a reduced fine of US$1.7billion. The fine was initially set at US$5.1billion after the sim card fiasco.
A listing on the local stock exchange could ease strong sentiments from Nigerian government insiders who feel South Africa’s MTN has made profits at the expense of ordinary Nigerians, even though the company has paid billions of dollars in taxes and levies in its 15 years of operations in Nigeria, Quartz Africa reported.
Authorities must rethink MTN’s upcoming OTC
Mr. Addae-Mensah noted that the upcoming MTN Ghana Over the Counter (OTC), which allows the telecom company to offload about 35percent of its shares to locals but not list publicly, must be looked at again because it short-changes thousands of retail investors.
MTN agreed that it will offload about 35percent of its shares to local investors in exchange for a 4G licence to operate in the country. Many investors were disappointed when MTN decided to use the OTC route instead of a widely expected public listing.
“MTN is taking advantage of a loophole and going through the route of an OTC, which is meeting the condition of offering a percentage to local investors, and not going fully public. This offer will fall in the hands of one or two institutions and individuals.
I do not think that was the spirit of the condition. I think the National Communications Authority (NCA) or Ministry of Communications must relook at this and force MTN to properly list on the GSE,” the investment banker said.