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BSE hosts second listings conference

The Botswana Stock Exchange (BSE) on Thursday hosted the second Annual Listings and Investment Conference on Thursday that attracted more than 400 delegates made up of leading companies, industry captains and entrepreneurs.


The theme for this year’s conference was “The BSE AS A GATEWAY FOR RAISING CAPITAL” and the overall aim of the conference was to open up the BSE to the business community and bring together the BSE, private companies with the potential to list on the BSE, listed companies and experts in capital markets to discuss the value added to a private company by a listing on a stock exchange, the listing process and requirements.


“The BSE recognises the fact that the survival of the stock exchange is underpinned by its attractiveness towards not 0nly investors, but also companies. As such, the supply side of the market, being issuers of securities, has to be consistently nurtured. Because of this, it is essential that we as the BSE host this conference annually to spur the interest and to maintain a large platform where we can address issues relating raising capital by listing,” said Thapelo Moribame, BSE Market Development Manager.


The heavily attended conference was officially opened by Vice President Mokgwetsi Masisi who reiterated the importance of the SMMEs and the value they create in the economy. The Vice President used the platform to rally investors to back up start-ups and support them with the necessary skills. Mr. Masisi also commended the BSE for taking the stock exchange to ordinary Batswana, citing that indeed the BSE seeks to create wealth for everyone.


The Conference which had seven panels comprising of industry leaders, regulators, entrepreneurs and investors, all agreed that funding was necessary and very critical to the survival of SMMEs that want to scale up. The discussions ranged from getting these companies on the stock exchange by demystifying commonly held perceptions that might have held back some companies from listing. Furthermore, panellists shared insights with participants on choosing the right kind of funding, how to attract quality funding, and the benefits that come with listing on a robust and credible stock exchange like the BSE.


Mr. Thapelo Tsheole, the BSE CEO, said: “Globally, SMMEs are significant employers and potential contributors to economic development, which is why their growth is vital to the nourishment of any vibrant economy. However access to external finance which may help an SMME transition into becoming a bigger company is a major barrier to this successful growth.”


Earlier on the guest speaker Ms. Stacie Walden, Executive Director at the Centre for Financial Markets at Milken Institute, delivered a moving presentation about the relationship between stock exchanges and SMMEs. Ms. Walden, together with a team of researchers, have recently concluded a study covering stock exchanges in emerging markets: South Africa, India and Jamaica. In the study, preliminary findings showed that SMMEs want to list but they find the process complex. However, most SMMEs that have listed have indicated that it was the best decision they made. Ms. Walden emphasised that listing on a stock Exchange like BSE will open doors for companies that seek to expand.


In addressing the usually stringent listings requirements that may have held back potential companies from listing, Mr. Tsheole stole the show when he announced that in addition to the venture board, the BSE is in the process of setting up a separate board on which SMMEs can list. “The new board will be called Tshipidi,” Mr Tsheole said to a rapture of applause.


The BSE has become visible as part of the strategy to woe more companies to list and also attract investors to the stock market. In the past, the BSE has travelled across the country selling its products to Batswana through open days, radio shows and commentary on local publications. On the international arena, the BSE has received accolades and special recognition: The BSE is now an affiliate of the prestigious World Federation of Exchanges and partner in the United Nations Sustainable Stock Exchanges Initiative.

 

The BSE is also a previous nominee of prestigious Ai Capital Markets Index Awards in the category,   “Most Innovative African Stock Exchange”, a testament of the BSE’s internationalization strategy that aims to position the BSE as one of the leading Stock Exchanges in Africa.

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

21st September 2020
Botswana-on-high-alert-as-AML-joins-Covid-19-to-plague-mankind-

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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