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BTCL BSE listing a success story

When it became the first state owned enterprise to list on the Botswana Stock Exchange in 2015, Botswana Telecommunications Corporation (BTC) a lot of detractors were quick to prophesy its failure but two years down the line, BTCL is one of the best performing entities listed on the BSE, and on Monday, BTCL was observed as the best performing stock on the local bourse year to date.

In 2015, Government, in a historic move offloaded 49% of the company shares and retained a 51% controlling stake in the telecommunication giant, during the listing Batswana who invested in the corporation were bluntly told by critics that they were throwing their money down the drain.

According to BTCL Chief Executive Officer, Anthony Masunga, BTCL stock is currently trading at P1.23, a 23 % appreciation on the listing price, a sentiment he highlighted at one of Botswana Stock Exchange regular seminars resourced by his company on Monday the 13th.  

The government of Botswana has recently moved to privatise state owned enterprises that are notably bleeding government coffers and are running at perennial losses. Experts are now saying the government should use the same model it used with BTCL asserts disposal, in which the state retained a controlling stake, with a significant shareholding offloaded to ordinary Batswana. It appears BTCL has now become today’s listing success story, and a model that now former critics prefer.

BTCL Boss, Anthony Masunga, who took the reins from Paul Taylor, observes that his company’s listing story became a success because of the support from Government, Botswana Stock Exchange and Public Enterprises and Economic Privatization Agency (PEEPA). “BTC‘s listing is a watershed moment in the economic inclusive narrative of Botswana, Government has always envisaged more businesses listing in the stock exchange and participating in the local economy,” noted Masunga.

“The BTC Initial Public Offering (IPO) was over scribed by over 140 percent,” he said. This could not have been achieved without the support from the BSE and other key stakeholders such as PEEPA and the Ministry of Transport and Communications.” BTC strengthened its business resolve to improve its services to customers and deliver a growing shareholder value. The company realised a growth of a 25.51 percent appreciation since the beginning of the year and a 46.43 per cent appreciation to those stock traders who purchased BTCL shares when share price was the lowest at P0.84. The second best performing stock in the Botswana Stock Exchange to date has appreciated by only 10.12%. BTCL dividend yield at 6.5%, compares favourably to most companies on the exchange and is higher than the market average of 4.3% for domestic companies.

At listing, BTC market value was P1.05 billion; and as of March 8 post listing, BTCL was valued at P1.29 billion. “In a nutshell, BTC has since listing created wealth to the value of P241.5 million for our shareholders and distributed P90.3million in dividends. We are further energised as we embark on a journey towards contributing to the successful economic development and growth of our nation,” said the Managing Director.

According to BTC executives the company aims at continuing being a financially stable corporation which realises growth in business space at all levels guided by best practice standards.  “The BTC story is a story about the future, about saving and investing. It is about accelerating the rate of economic growth by stimulating entrepreneurship and investment.BTC offers potential for financial gain through share value growth and dividends when they are declared, self-wealth generation, greater understanding of and participation in economic activity,” he concluded.

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Botswana on high red alert as AML joins Covid-19 to plague mankind

21st September 2020

This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.

The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.

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Finance Committee cautions Gov’t against imprudent raising of debt levels

21st September 2020
Finance Committe Chairman: Thapelo Letsholo

Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.

He was speaking in  Parliament on Tuesday delivering  Parliament’s Finance Committee report after assessing a  motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.

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Gov’t Investment Account drying up fast!  

21st September 2020
Dr Matsheka

Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.

The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.

The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.

The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.

This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.

Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.

Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.

However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.

Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.

When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.

This  as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.

Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.

The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.

Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.

In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.

Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.

Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.

Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.

Acknowledging the need to draw down from GIA no more, current Minister of Finance   Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”

He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”

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