The Botswana Stock Exchange (BSE) third annual Listings & Investment Conference is expected to be bigger, better and more informative this year. It shall also speak to the topic of economic diversification and the potential role of the BSE.
The conference will be held at the Gaborone International Convention Centre (GICC) on the 8th of March 2018. This year‘s edition speaks directly to current language of Botswana economic transformation quest, BSE officials told members of the press this Monday at their offices in Gaborone. The conference will be held under the theme “Botswana Stock Exchange – a platform for economic growth & diversification”.
The overall aim of the Listings & Investment Conference is to open up the BSE to the business community and bring together the BSE, private companies with the potential to list on the stock exchange, listed companies and experts in capital markets to discuss the value added to a private company by listing on a stock exchange. The listing process and requirement will also be discussed.
The conference will also provide a platform for listed companies to share lessons on how they created value through listing and how they leveraged on their listing to expand their services and products offerings to markets outside Botswana. This year, BSE has also extended the invitation to Small, Medium Enterprises (SMEs) with the aim to give them exposure and provide business dialogue and exchange of views.
Giving more details on the event Botswana Stock Exchange Chief Executive Officer, Thapelo Tsheole said the genesis of the conference was to attract listings to the Exchange and spread the message of listings as far as possible.“We have made efforts to reach ordinary people and educate them on the listing and investing in stock markets and we are realizing progress in terms of companies coming forward to list,” he said. Tsheole noted that convincing companies to list is a process and that the actual listing also is a long process.
BSE also shared that amongst the key topics to be discussed was the much talked about and futuristic crypto currencies which are novel areas of possible investor interest for the local market. “We will have experts in this interest area, because we have witnessed a lot of public interest in these commodities,” shared Tsheole. BSE Marketing Head Thapelo Moribame revealed that they have also invited representatives from the World Federation of Exchanges to brief the conference on the issue of listing family owned businesses.
This year ‘s conference will be sponsored by Botswana Insurance Holdings Limited (BIHL) Group as the Diamond Sponsor , Choppies Enterprises Limited, Rantao Kewagamang Attorneys and Monthe Marumo Attorneys among others. Just as in the previous two conferences the Vice President of the Republic of Botswana, Honourable Mokgweetsi E. Masisi will deliver the official opening remarks. The conference is expected to gather a total of 400 delegates, including lawyers, brokers, corporate financiers, asset managers and trustees amongst others
BSE to host AMEDA meet
The Botswana Stock Exchange (BSE), will also host another key event just after the listing conference, which is the meeting of the Africa Middle East Depositories Association (AMEDA) in collaboration with Central Securities Depository Botswana (CSDB) which is a 100 % owned subsidiary of the Botswana Stock Exchange.
The 27th meeting of AMEDA will be held on the 11-12th April, 2018 at Cresta Mowana Safari Lodge in Kasane. BSE says hosting this meeting is a huge achievement for the BSE and Botswana as a whole as it will be the first time that the AMEDA meeting is held in Botswana. “This therefore demonstrates our prowess and our commitment to building a world class securities exchange as about 28 full members and 8 affiliate members of AMEDA from about 32 countries around the world will descend on the tourist town of Kasane for the meeting,” reads a recent press statement by BSE.
The AMEDA meetings are dedicated towards the review of the association’s financial performance, as well as conducting workshops on the relevant topics that impact the operations of the Central Securities Depositories in the AMEDA region. AMEDA is a non-profit organization comprised of Central Securities Depositories and Clearing Houses in Africa & the Middle East and was formed for the benefit of its member community, as an elective, inter-professional and regional facility geared towards fostering the spirit of cooperation, reciprocity and harmony among members. Its main purpose is to provide a forum for the exchange of information and experiences among its members in a spirit of mutual cooperation.
Marcian Concepts have been contracted by Selibe Phikwe Economic Unit (SPEDU) in a P230 million project to raise the town from its ghost status. The project is in the design and building phase of building an industrial hub for Phikwe; putting together an infrastructure in Bolelanoto and Senwelo industrial sites.
This project comes as a life-raft for Selibe Phikwe, a town which was turned into a ghost town when the area’s economic mainstay, BCL mine, closed four years ago. In that catastrophe, 5000 people lost their livelihoods as the town’s life sunk into a gloomy horizon. Businesses were closed and some migrated to better places as industrial places and malls became almost empty.
However, SPEDU has now started plans to breathe life into the town. Information reaching this publication is that Marcian Concepts is now on the ground at Bolelanoto and Senwelo and works have commenced. Marcian as a contractor already promises to hire Phikwe locals only, even subcontract only companies from the area as a way to empower the place’s economy.
The procurement method for the tender is Open Domestic bidding which means Joint Ventures with foreign companies is not allowed. According to Marcian Concepts General Manager, Andre Strydom, in an interview with this publication, the project will come with 150 to 200 jobs. The project is expected to take 15 months at a tune of P230 531 402. 76. Marcian will put together construction of roadworks, storm-water drains, water reticulation, street lighting and telecommunication infrastructure. This tender was flouted last year August, but was awarded in June this year. This project is seen as the beginning of Phikwe’s revival and investors will be targeted to the area after the town has worn the ghost city status for almost half a decade.
The International Monetary Fund (IMF) has slashed its outlook the world economy projecting a significantly deeper recession and slower recovery than it anticipated just two months ago.
On Wednesday when delivering its World Economic Outlook report titled “A long difficult Ascent” the Washington Based global lender said it now expects global gross domestic product to shrink 4.9% this year, more than the 3% predicted in April. For 2021, IMF experts have projected growth of 5.4%, down from 5.8%. “We are projecting a somewhat less severe though still deep recession in 2020, relative to our June forecast,” said Gita Gopinath Economic Counsellor and Director of Research.
The struggle of humanity is now how to dribble past the ‘Great Pandemic’ in order to salvage a lean economic score. Botswana is already working on dwindling fiscal accounts, budget deficit, threatened foreign reserves and the GDP data that is screaming recession.
Latest data by think tank and renowned rating agency, Moody’s Investor Service, is that Botswana’s fiscal status is on the red and it is mostly because of its mineral-dependency garment and tourism-related taxation. Botswana decided to close borders as one of the containment measures of Covid-19; trade and travellers have been locked out of the country. Moody’s also acknowledges that closing borders by countries like Botswana results in the collapse of tourism which will also indirectly weigh on revenue through lower import duties, VAT receipts and other taxes.
Latest economic data shows that Gross Domestic Product (GDP) for the second quarter of 2020 with a decrease of 27 percent. One of the factors that led to contraction of the local economy is the suspension of air travel occasioned by COVID-19 containment measures impacted on the number of tourists entering through the country’s borders and hence affecting the output of the hotels and restaurants industry. This will also be weighed down by, according to Moody’s, emerging markets which will see government losing average revenue worth 2.1 percentage points (pps) of GDP in 2020, exceeding the 1.0 pps loss in advanced economies (AEs).
“Fiscal revenue in emerging markets is particularly vulnerable to this current crisis because of concentrated revenue structures and less sophisticated tax administrations than those in AEs. Oil exporters will see the largest falls but revenue volatility is a common feature of their credit profiles historically,” says Moody’s. The domino effects of containment measures could be seen cracking all sectors of the local economy as taxes from outside were locked out by the closure of borders hence dwindling tax revenue.
Moody’s has placed Botswana among oil importers, small, tourism-reliant economies which will see the largest fall in revenue. Botswana is in the top 10 of that pecking order where Moody’s pointed out recently that other resource-rich countries like Botswana (A2 negative) will also face a large drop in fiscal revenue.
This situation of countries’ revenue on the red is going to stay stubborn for a long run. Moody’s predicts that the spending pressures faced by governments across the globe are unlikely to ease in the short term, particularly because this crisis has emphasized the social role governments perform in areas like healthcare and labour markets.
For countries like Botswana, these spending pressures are generally exacerbated by a range of other factors like a higher interest burden, infrastructure deficiencies, weaker broader public sector, higher subsidies, lower incomes and more precarious employment. As a result, most of the burden for any fiscal consolidation is likely to fall on the revenue side, says Moody’s.
Moody’s then moves to the revenue spin of taxation. The rating agency looked at the likelihood and probability of sovereigns to raise up revenue by increasing tax to offset what was lost in mineral revenue and tourism-related tax revenue. Moody’s said the capacity to raise tax revenue distinguishes governments from other debt issuers. “In theory, governments can change a given tax system as they wish, subject to the relevant legislative process and within the constraints of international law. In practice, however, there are material constraints,” says Moody’s.
‘‘The coronavirus crisis will lead to long-lasting revenue losses for emerging market sovereigns because their ability to implement and enforce effective revenue-raising measures in response will be an important credit driver over the next few years because of their sizeable spending pressures and the subdued recovery in the global economy we expect next year.’’
According to Moody’s, together with a rise in stimulus and healthcare spending related to the crisis, the think tank expects this drop in revenue will trigger a sizeable fiscal deterioration across emerging market sovereigns. Most countries, including Botswana, are under pressure of widening their tax bases, Moody’s says that this will be challenging. “Even if governments reversed or do not extend tax-easing measures implemented in 2020 to support the economy through the coronavirus shock, which would be politically challenging, this would only provide a modest boost to revenue, especially as these measures were relatively modest in most emerging markets,” says Moody’s.
Botswana has been seen internationally as a ‘tax ease’ country and its taxes are seen as lower when compared to its regional counterparts. This country’s name has also been mentioned in various international investigative journalism tax evasion reports. In recent years there was a division of opinions over whether this country can stretch its tax base. But like other sovereigns who have tried but struggled to increase or even maintain their tax intake before the crisis, Botswana will face additional challenges, according to Moody’s.
“Additional measures to reduce tax evasion and cutting tax expenditure should support the recovery in government revenue, albeit from low levels,” advised Moody’s. Botswana’s tax revenue to the percentage of the GDP was 27 percent in 2008, dropped to 23 percent in 2010 to 23 percent before rising to 27 percent again in 2012. In years 2013 and 2014 the percentage went to 25 percent before it took a slip to decline in respective years of 2015 up to now where it is at 19.8 percent.