At the moment, Ghana’s online investor relations practices can be described as practically non-existent. This is not unusual. We have pointed out that it has only been in the last three to five years that technologies have developed to the point where the majority of the pain associated with online communication can be eliminated and some of the commercial pleasure enjoyed.

Winston Nelson, the CEO of African Alliance Securities Ghana, analysed the online IR practices of Ghana’s listed companies in his presentation at our workshop.

The following key statistics were presented:-

• Only 17% of listed companies in Ghana have IR websites
• Only 2% have the contact details of an IR officer online
• Company apathy toward meeting investors has increased after the worldwide economic meltdown (when it should be the other way) as only 6 out of 34 listed companies utilised the GSE’s meet investor initiatives (one third of the activity of 2008)
• The practice of posting annual reports online is not prevalent

But Ghana, like many other countries, is reaching that tipping point where internet and mobile access rates show the rapidly growing potential for digital investor communications. Some statistics on the market:

• Number of listed companies on the Ghana Stock Exchange: 34
• Total market capitalization: USD10bn
• Number of Internet users : 1,000,000
• Number of shareholders: 250,000
• Number of shareholders in CSD: 25,000
• Mobile penetration rate: 60%

In my experience, in many countries with smaller, illiquid stock markets, securities markets professionals seem staid in their attitudes to the market. Things don’t change much from day to day, so the introduction of something new like online shareholder communication takes some time to digest. I have often noted that African capital market regulators are some of the most widely travelled executives, yet have not pushed the technology agenda to ensure that stock market information is immediately available online, and that shareholder communications from listed companies use online platforms.

What Does the Audience Think?

We asked participants to fill in a brief questionnaire to hear whether and how they prioritise online IR management. Here are some of the highlights:

Participants almost unanimously agreed that those companies starting their online IR activities early would benefit the most in the long run. This is consistent with the experience of US companies after electronic communications were permitted in 2005. Those that embraced the technology changes learnt how to benefit from them early.

The majority of respondents may agree that the internet was the way forward for shareholder communications and the environment was right in Ghana for online IR, but approximately 1/3 of respondents indicated that the timing and the environment were only somewhat relevant, so there are clearly some doubts. Executives, investors and market participants are not looking forward, they are looking backward. That said, the Ghanaian executives I met have been most responsive to the principles we shed light on.

The other common retort across all markets I have visited (including, incidentally, in the US where 90% of the investing population has access to the internet) is why should online investor relations practices be introduced when rural people have no access to computers? Ghana has approximately 1 million Internet users, compared to only 250,000 shareholders. Surely it is a safe assumption that the majority of shareholders should have access to the internet. It access to email that is the key criterion, but lets stick with the Internet at the moment. It just takes one investor to change the fortunes of a company and directors have an obligation to ensure that broad arrays of tools are available for investors to access information. I am unaware of any regulators in any markets in Africa that are carrying out surveys of the profiles of investors, retail or otherwise, their habits, their needs, access to phones, internet average wealth etc. These have been common in the US and are used to drive the SEC’s strategy for overall market development. The various African Governments that were proponents of privatisation campaigns and that carried them out successfully should now ensure that the mass of shareholders that they created can make meaningful use of their share in the economy. Listed companies generally ignore retail shareholders.

In explaining why companies had not previously had an online IR presence, respondents most commonly attributed this to a lack of policy (probably at board level) within their company. Lack of awareness was also mentioned. This was substantiated by similar findings elsewhere that also noted the absence of policies to deal with online communications. Dealing with the hassle of IT and the cost of IT were the next most common reasons, which I assume have their origins in the absence of tools and technology (and skills) readily available to listed companies.

Most respondents were somewhat (not strongly) happy with their corporate websites – to me, this is further evidence of limited awareness of recent trends and online communications practices.

In considering the relevance of an online IR programme, increasing communications efficiency was seen as the overriding relevant factor in justifying an online IR programme. Saving management time was the next most prominent justification, followed equally by ensuring competitiveness to peers, reducing costs and promoting investor and customer loyalty.

Rob Stangroom

CEO

African Is Cool

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