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BSE fired up for Listings conference

The Botswana Stock Exchange on Thursday held a media briefing for their upcoming 2nd annual listings conference to be held on the 9th of March.


In a written statement, the BSE says the theme for this year’s conference is “The BSE AS A GATEWAY FOR RAISING CAPITAL” and that the overall aim of the 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 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,” the statement read.


Still at the media briefing, Mr. Thapelo Tsheole, BSE CEO, told the audience that they go to the conference with strong intentions to increase the number of companies listed on the BSE. Mr. Tsheole said their efforts were emboldened by the success of the inaugural Listings Conference held last year. He sail while in 2016 they invited 150 companies, this year’s conference will be graced by the presence of the more than 300 invited businesses.


Mr. Tsheole said the BSE continues with its awareness raising campaigns in a bid to woe investors and companies. Furthermore, he said in these campaigns they invite listed companies to share their experience in the local bourse as well as other value adding companies, such as law and accounting firms, to help explain the journey to listing.


He explained that BSE contributed to the economy by offering different classes of investments. He said that they will be aggressive in pursuing the expansion of the BSE by increasing listed companies. To achieve this, Mr. Tsheole said they will be targeting mature citizen owned companies that have prospects to grow in the stock market even though it will prove to be a difficult undertaking.


“It is very difficult to convince Motswana to sell part of what they own,” he said before adding that this requires time as consultations tend to take long. The upbeat CEO said that they are pursuing some companies that they spotted at the previous conference and that talks and consultations are ongoing.


The timing of the conference comes at a time when BSE board has just recently approved the institution’s new 2017-2021 strategy that is big on expansion. In crunching the numbers, Mr. Tsheole said, the currently listed 34 companies make up 34% of the country’s GDP but under the new strategy are targeting to hit 40% of the GDP in five years.

 

He says this will be achieved through growing the number of domestic listed companies from 24 to 30. Mr. Tsheole said this will not be easy as it is difficult to get a listing in African stock markets. Still on the numbers, the BSE seeks to increase foreign listed companies from 10 to 15, number of listed bonds from 39 to 50 and increase the number of listed Exchange Traded Funds (ETFs) from 4 to 10.


“The strategy is very clear. It’s in the numbers,” said Mr. Tsheole. The BSE CEO says not only will they increase the number of listed companies but they are also introducing other asset classes. Currently the BSE offers four asset classes; Equities, Corporate and Government Bonds and ETFS. Amongst the touted investment products to be introduced are derivatives, Commercial Papers and Certificates of deposit.


Mr. Tsheole says their recent efforts align with their enduring interest to see many citizens participating in the stock market. To this end, the BSE will try to increase the number of investors in the BSE from 78000 to 100000 in 5 years. He said these are the same people who are powering the small, medium and macro enterprises (SMMES). Mr. Tsheole then said SMMEs are the backbone of the economy yet face immense challenges.


“There is a critical need for corporate financing especially in the SMMEs sectors,” Mr. Tsheole explained and also added that they are encouraging other stakeholders to come on board to solve this challenge. He said accounting and law firms can provide their expertise to help SMMEs access the appropriate funding method. Mr. Tsheole said part of the efforts to help the SMMEs may include introducing a specialised SMME board which will have special listings requirements.


The media was also briefed by Ms. Tebogo Keepetsoe, Public Relations, Communications and Marketing manager at Botswana Insurance Holdings Group (BIHL). BIHL is the diamond sponsor for the upcoming conference. “BIHL group has been a long standing listed company on the BSE. And I think if anything, it’s important that I share some thoughts on our BIHL journey to listing. And I’d also like to share on some key aspects that we have found of benefit from being a listed company,” she said.


Ms. Keepetsoe says BIHL has enjoyed a long history at the BSE, starting in 1991 with an oversubscribed initial public offering (IPO) that floated shares at 0.22t, and 26 years later the shares are trading at more than P17. She says as the main sponsors of the upcoming listings conference, it is a testament of their belief in the listing process and as a company they hope it will encourage other local companies to list on the BSE, especially if they are reviewing their growth strategies.


She said some of the benefits that accrued to them after listing include access to large scale fundraising as well as increased exposure to raise asset value through acquisitions. Moreover listing has brought them closer with the public and potential investors. According to Ms. Keepetsoe, this has greatly enhanced the group’s credibility and raised its corporate profile to expand in other markets.


“The BSE itself is an incredibly successful bourse to list on. It currently stands as the third largest in the region, in terms of market capitalisation. A feat which, if I may, commend Mr. Tsheole and his team for achieving at such a phenomenal pace, considering that our local economy still has a lot of growing to do,” she said.  


The BSE also raised similar praise from Ms. Tumi Ramsden, Head of Corporate Affairs, Brand and Marketing at Standard Chartered bank Botswana, who said that the bank shares a fruitful relationship with the BSE ever since it listed when the stock market was still at its infancy. Ms. Ramsden says the listings conference provides a platform to participants to find opportunities and collectively contribute to the growth and health of the economy.

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Business

New study reveals why youth entrepreneurs are failing

21st July 2022
Youth

The recent study on youth entrepreneurship in Botswana has identified difficult access to funding, land, machinery, lack of entrepreneurial mindset and proper training as serious challenges that continue to hamper youth entrepreneurship development in this country.

The study conducted by Alliance for African Partnership (AAP) in collaboration with University of Botswana has confirmed that despite the government and private sector multi-billion pula entrepreneurship development initiatives, many young people in Botswana continue to fail to grow their businesses into sustainable and successful companies that can help reduce unemployment.

University of Botswana researchers Gaofetege Ganamotse and Rudolph Boy who compiled findings in the 2022 study report for Botswana stated that as part of the study interviews were conducted with successful youth entrepreneurs to understand their critical success factors.

According to the researchers other participants were community leaders, business mentors, Ministry of Trade and Industry, Ministry of Youth, Gender, Sport and Culture, financial institutions, higher education institutions, non-governmental institutions, policymakers, private organizations, and support structures such as legal and technical experts and accountants who were interviewed to understand how they facilitate successful youth entrepreneurship.

The researchers said they found that although Botswana government is perceived as the most supportive to businesses when compared to other governments in sub-Saharan Africa, youth entrepreneurs still face challenges when accessing government funding. “Several finance-related challenges were identified by youth entrepreneurs. Some respondents lamented the lack of access to start-up finance, whereas others mentioned lack of access to infrastructure.”

The researchers stated that in Botswana entrepreneurship is not yet perceived as a field or career of choice by many youth “Participants in the study emphasized that the many youth are more of necessity entrepreneurs, seeing business venturing as a “fall back. Other facilitators mentioned that some youth do not display creativity, mind-blowing innovative solutions, and business management skills. Some youth entrepreneurs like to take shortcuts like selling sweets or muffins.”

According to the researchers, some of the youth do not display perseverance when they are faced with adversity in business. “Young people lack of an entrepreneurial mindset is a common challenge among youth in business. Some have a mindset focused on free services, handouts, and rapid gains. They want overnight success. As such, they give up easily when faced with challenges. On the other hand, some participants argue that they may opt for quick wins because they do not have access to any land, machinery, offices, and vehicles.”

The researchers stated that most youth involved in business ventures do not have the necessary training or skills to maintain a business. “Poor financial management has also been cited as one of the challenges for youth entrepreneurs, such as using profit for personal reasons rather than investing in the business. Also some are not being able to separate their livelihood from their businesses.

Lastly, youth entrepreneurs reported a lack of experience as one of the challenges. For example, the experience of running a business with projections, sticking to the projections, having an accounting system, maintaining a clean and clear billing system, and sound administration system.”

According to the researchers, the participants in the study emphasized that there is fragmentation within the entrepreneurial ecosystem, whereby there is replication of business activities without any differentiation. “There is no integration of the ecosystem players. As such, they end up with duplicate programs targeting the same objectives. The financial sector recommended that there is a need for an intermediary body that will bring all the ecosystem actors together and serve as a “one-stop shop” for entrepreneurs and build mentorship programs that accommodate the business lifecycle from inception to growth.”

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Business

BHC yearend financial results impressive

18th July 2022
BHC

Botswana Housing Corporation (BHC) is said to have recorded an operating surplus of P61 Million, an improvement compared to the previous year. The housing, office and other building needs giant met with stakeholders recently to share how the business has been.

The P61 million is a significant increase against the P6 million operating loss realized in the prior year. Profit before income tax also increased significantly from P2 million in the prior year to P72 million which resulted in an overall increase in surplus after tax from P1 million prior year to P64 million for the year under review.

Chief of Finance Officer, Diratsagae Kgamanyane disclosed; “This growth in surplus was driven mainly by rental revenue that increased by 15% from P209 million to P240 million and reduction in expenditure from P272 million to P214 million on the back of cost containment.”
He further stated that sales of high margin investment properties also contributed significantly to the growth in surplus as well as impairment reversals on receivables amounting to P25 million.

It is said that the Corporation recorded a total revenue of P702 million, an 8% decrease when compared to the P760 million recorded in the prior year. “Sales revenue which is one of the major revenue streams returned impressive margins, contributing to the overall growth in the gross margin,” added Kgamanyane.

He further stated professional fees revenue line declined significantly by 64% to P5 million from P14 million in the prior year which attributed to suspension of planned projects by their clients due to Covid-19 pandemic. “Facilities Management revenue decreased by P 24 million from P69 million recorded in prior year to P45 million due to reduction in projects,” Kgamanyane said.

The Corporation’s strength is on its investment properties portfolio that stood at P1.4 billion at the end of the reporting period. “The Corporation continues its strategy to diversify revenue streams despite both facilities management income and professional fees being challenged by the prevailing economic conditions that have seen its major clients curtailing spending,” added the CEO.

On the one hand, the Corporation’s Strategic Performance which intended to build 12 300 houses by 2023 has so far managed to build 4 830 houses under their SHHA funding scheme, 1 240 houses for commercial or external use which includes use by government and 1 970 houses to rent to individuals.

BHC Acting CEO Pascaline Sefawe noted that; BHC’s planned projects are said to include building 336 flat units in Gaborone Block 7 at approximately P224 million, 100 units in Maun at approximately P78 million, 13 units in Phakalane at approximately P26 million, 212 units in Kazungula at approximately P160 million, 96 units at approximately P42 million in Francistown and 84 units at approximately P61 million in Letlhakane. Emphasing; “People tend to accuse us of only building houses in Gaborone, so here we are, including other areas in our planned projects.”

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Business

Commercial banks to cash big on high interest rates on loans

18th July 2022
Commercial-banks

Researchers from some government owned regulatory institutions in the financial sector have projected that the banking sector’s profitability could increase, following Bank of Botswana Monetary Policy Committee recent decision to increase monetary policy rate.

In its bid to manage inflation, Bank of Botswana Monetary Policy Committee last month increased monetary policy rate by 0.50 percent from 1.65 percent to 2.15 percent, a development which resulted with commercial banking sector increasing interest rate in lending to household and companies. As a result of BoB adjustment of Monetary Policy Rate, from 1.65 percent to 2.15 percent commercial banks increased prime lending rate from 5.76 percent to 6.26 percent.

Researchers from Bank of Botswana, the Non-Bank Financial Institutions Regulatory Authority, the Financial Intelligence Agency and the Botswana Stock Exchange indicated that due to prospects of high inflation during the second half of 2022, there is a possibility that the Monetary Policy Committee could further increase monetary policy rate in the next meeting in August 25 2022.

Inflation rose from 9.6 percent in April 2022 to 11.9 percent in May 2022, remaining above the Bank of Botswana medium-term objective range of 3 – 6 percent. According to the researchers inflation could increase further and remain high due to factors that include: the potential increase in international commodity prices beyond current forecasts, logistical constraints due to lags in production, the economic and price effects of the ongoing Russia- Ukraine conflict, uncertain COVID-19 profile, domestic risk factors relating to possible regular annual administered price adjustments, short-term unintended consequences of import restrictions resulting with shortages in supplies leading to price increases, as well as second-round effects of the recent increases in administered prices “Furthermore, the likelihood of further increases in domestic fuel prices in response to persistent high international oil prices could add upward pressure to inflation,” said the researchers.

The researchers indicated that Bank of Botswana could be forced to further increase monetary policy rate from the current 2.15 percent if inflation rises persistently. “Should inflation rise persistently this could necessitate an upward adjustment in the policy rate. It is against this background that the interest rate scenario assumes a 1.5 percentage points (moderate scenario) and 2.25 percentage points (severe scenario) upward adjustment in the policy rate,” said the researchers.

The researchers indicated that while any upward adjustment on BoB monetary policy rate and commercial banks prime lending rate result with increase in the cost of borrowing for household and compnies, it increase profitability for the banking sector. “Increases in the policy rate are associated with an overall increase in bank profitability, with resultant increases in the capital adequacy ratio of 0.1 percentage points and 0.2 percentage points for the moderate and severe scenarios, respectively,” said the researchers who added that upward adjustment in monetary policy rate would raise extra capital for the banking sector.

“The increase in profit generally reflects the banking industry’s positive interest rate gap, where interest earning assets exceed interest earning liabilities maturing in the next twelve months. Therefore, an increase of 1.5 percentage points in the policy rate would result in industry gains of P71.7 million (4.1 percent increase), while a 2.25 percentage points increase would lead to a gain of P173.9 million (6.1 percent increase), dominated by large banks,” said the researchers.

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