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BSE changes tact

BSE CEO: Thapelo Tsheole

In an effort to expand its reach and deepen the understanding of financial markets, the Botswana Stock Exchange (BSE) has launched its newly revamped social media platform as part of its outreach programme to existing and potential investors. The BSE will rely on popular social networks such as Facebook and Twitter to disseminate information in a timely manner. Botswana has one of the world’s highest mobile penetrations hovering around 170 percent as reported in 2015, this, the BSE hopes to tap in it.

The BSE head honcho, Thapelo Tsheole says this represents an exciting times both for the BSE and investors. “This is one of our strategies in order to disseminate information to better serve the many investors that want to explore the possibilities of investing in the BSE. It’s a very exciting time for us and as you might realise information is very important in investment and therefore I think we are getting a step ahead in terms of disseminating information for people to make investment decisions wisely and for people to have information in order to manage and run their investment portfolios,” beamed the CEO in a video posted in their facebook page.

The latest revamp of the social media platforms adds another chapter to Tsheole’s vision of positioning the BSE into a “destination of choice for investors by ensuring a robust stock exchange with quality equity, bond and alternative listings; a deep and liquid trading environment and world class regulatory and supervision environment”, something which had said in earlier interviews .

In April, the BTCL IPO ushered in more than 50000 citizen investors, prior to that there were only 28122 registered Central Securities Depository Accounts (CSD). Not only did the BTCL IPO bringing a record breaking number of retail investors to the local bourse, it has also prodded the BSE to improve on its information dissemination platforms to help ease in new investors who know so little about the stock market. The revamped media platforms will be an extension to the broader strategy which includes the ongoing recruitment of Market Development Manager as well as the tender floated for submission of proposals for the design, development and implementation of a new and modern website with an integrated Data Analysis and Reporting System.

The BSE which has grand plans that include promoting wealth creation through citizen empowerment and participation has been busy at work. Just recently this year, the BSE held its inaugural BSE Listings conference to woe businesses that aspire to list on one Africa’s most stable and sound stock market. Moreover, the BSE has been engaged in a series of awareness campaigns that seek to engage those interested in the stock exchange. “The BSE undertakes numerous initiatives with a view of reaching out to retail investors and promoting financial literacy. In addition to an array of programs across various radio stations in which the BSE features. The design of the program is a much more efficient way of dealing with trending stock market issues as listeners are able to enquire and get instant feedback,” Kopano Bolokwe, the BSE acting Product Development Manager, explained.

Meanwhile, the BSE is making headways in becoming a formidable player in Africa’s stock markets with the recent two successful IPOs in less than two months, giving investors more options on where to park their money. The highly publicised BTCL IPO listed 1.05 billion issued securities, of which 49% are reserved for citizens while the government remained the majority shareholder. The BTCL share offer price was at P1, however on the first month of trading the stock grew by as much as 35%, but by the end of April the share price was retreating and is now at P1.14.

Far Property Company (FPC) this week listed on the BSE main counter, joining the other 5 existing property companies and bringing the total number of listed companies on the main board to 24. Furthermore, FPC with its issued 380 million units saw its share price jump by ).8% from the offer price to close at P2.59, giving it a market capitalisation P984.2 million, and making it the 3rd most valuable listed property company on the BSE. The founders of FPC have now become legends in successfully listing companies; their maiden listing was a resounding success as they listed Choppies, first in the BSE and subsequently in the Johannesburg Stock Exchange. In this listing, the founders are looking at a windfall of about P102 million while the company will also pocket the same. The reason for listing the company was to raise funds for ongoing projects and other future projects.

The BTCL IPO which was oversubscribed has brought in twice the number of previously existing investors, with majority being first time buyers of equity . The FPC IPO even though was not as publicised as that of BTCL was also oversubscribed, and in the process attracted the attention of 646 applicants. The oversubscription of the IPOs signals an increasing appetite for the stock market as local investors seek returns in the stock exchange that has averaged returns of 11.58% last year. This has delighted the BSE as the entrance of more retail investors will help improve the liquidity of the local bourse. Over time there has been frustrations in some quarters that the dominance of institutional investors in the BSE has perpetuated the BSE’s illiquidity, largely in part to their investment philosophy which involves buying and holding stocks for long investment horizon period.

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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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