The Botswana Stock Exchange (BSE) has reported that 464.3 million shares worth P1 billion were traded in the local equity market between January 1st 2022 and November 30th 2022.
According to the BSE’ market performance report released this week, the top 3 traded companies during the period under review were Letshego which traded shares worth P492.6 million shares, followed by First National Bank Botswana (P87.9 million) and Sefalana (P63.4 million). The total turnover from these 3 companies accounted for 63.9% of total equity turnover with the leading counter Letshego accounting for 48.9% of total equity turnover.
The report states that Letshego’s considerable contribution to total equity turnover results from two significantly high trades of P183.0 million on 23rd March 2022 and P142.7 million on 17th June 2022, accounting for the two highest daily trades per counter in 2022 thus far. “Total equity turnover during the review period in 2022 amounted to P1.0 billion from traded volumes of 464.2 million shares, translating into an average daily turnover of P4.4 million. Local companies contributed 58.8% to total equity turnover or P591.9 million while local individuals contributed 4.8% during this period or P48.1 million to total equity turnover. Foreign companies contributed 31.6% or P318.4 million while foreign individuals contributed 4.8% or P48.5 million to total equity turnover respectively,” reads the report in part.
The report shows that total turnover during the same period in 2021 amounted to P1.8 billion, following trading of a total of 965.9 million shares during the period. The report added that the higher turnover was largely attributed to the historic transaction regarding Access Bank’s 78.15% acquisition of Banc ABC Botswana on 11th October 2021 which amounted to P1.1 billion and contributed 60.8% to turnover. During the same period in 2021, top 3 traded companies accounted for 74.9% of total equity turnover with the leading counter Access Bank accounting for 60.9% (P1.1 Billion) of total equity turnover.
The share price performance of listed companies for the period January 1st 2022 and November 30th 2022 shows that of the 31 listed companies, 9 depreciated in share price, 17 appreciated in share price while 5 experienced no share price change. The top gainer over the 1 January to 30 November period was Standard Chartered Bank Botswana (Stanchart) with an appreciation of 43.4%, followed by First National Bank Botswana and Letlole La Rona (Letlole) with gains of 34.4% and 23.5% respectively. BBS Limited experienced the biggest decline in share price after dropping by 40.5% followed by Prime Time Property Holdings and Minergy with declines of 23.8% and 20.0% respectively.
Commenting on the performance of Exchange Traded Funds (ETFs) in BSE during the last 11 months of trading the report noted that ETF turnover amounted to P122.3 million higher than P112.2 million recorded during the same period in 2021. In terms of volume, ETFs traded 782,862 units in 2022 and statistics in the report shows that the newly listed African Development Bank Fund (ADBF) ETF, New Funds ETF, New Gold ETF, BASBI ETF, New Pall ETF prices gained 0.2%, 4.3%, 4.5%, 5.0% and 6.5% respectively while New Plat ETF and BAMIB50 ETF declined by 5.4% and 26.1% respectively.
During the review period the value of traded bonds was P1.9 billion compared to P2.5 billion traded during the same period in 2021 and by the end of November 2022, the market capitalization of listed bonds stood at P26.0 billion.
The Financial Stability Council (FSC) update released last week shows that stock market capitalization at BSE is improving. “The total equity market value of domestic listed companies gained 9.4 percent, year-on-year, to P39.3 billion in September 2022 compared to September 2021 value of P35.9 billion. The gains reflect the overall recovery of the domestic market due to the opening of the economy and the resultant increase in economic activity. In general, the market is showing signs of recovery, with month-on-month increases in market capitalization, leading to a cumulative gain of P5.5 billion since March 2021.”
FSC is an agency comprised of senior officials from the Ministry of Finance and Economic Development (MFED), the Non-Bank Financial Institutions Regulatory Authority (NBFIRA), the Financial Intelligence Agency (FIA) and BSE. The Council is chaired by Bank of Botswana Governor Moses Pelaelo.
The Council noted that liquidity in the local bourse is also improving, with the liquidity ratio rising to 5.9 percent in September 2022 from 1.8 percent in September 2021 and added that the improvement in stock market liquidity has been due to higher market activity in 2022 than in the corresponding period in 2021.
The Council stated that the domestic stock market is profitable. “The Domestic Company Total Return Index (DCTRI) appreciated by 11.6 percent in September 2022 against 7.9 percent in the corresponding period in 2021. This index provides a means for signaling profitability in the domestic stock market as it shows gains or losses in equity positions due to market capitalization appreciation or depreciation and dividend returns. Therefore, the higher appreciation of the DCTRI in 2022 shows that the domestic market is more profitable than it was in 2021.”
According to the Council the developments in market capitalization in the twelve months to December 2021 translated into a stronger performance of the domestic company index (DCI), as it turned around from a gradual decline that started in 2015 “The losses suffered by the local stock market since 2015 were precipitated by weak economic fundamentals, which partially translated into poor company performance. The DCI recovered to 7010 in 2021, further increasing to 7402 in September 2022, but recorded rising volatility potentially reflecting the inherently risky nature of equity markets. Nonetheless, investor confidence is expected to improve, especially on the back of strong economic prospects for 2022 and beyond.”
Botswana financial sector safe despite high unsecured household loans – IMF
Botswana’s financial sector has been deemed safe and resilient by the International Monetary Fund (IMF), despite the presence of high levels of unsecured household loans. The IMF’s 2023 report on the country’s financial sector highlights the robustness of Botswana’s banking system and its ability to withstand various shocks.
According to the report, credit risk is the largest risk in Botswana’s banking system, with a significant portion of total assets comprising loans concentrated in the household sector. Specifically, 70 percent of bank loans to households in Botswana are personal loans, primarily in the form of unsecured consumer credit. However, the IMF notes that a large share of lenders collect repayments through direct salary deduction, resulting in a generally low level of non-performing household loans.
The IMF’s assessment confirms that most banking entities in Botswana have strong capital buffers, which would enable them to survive even in the event of an increase in non-performing loans in the household sector. While a 20 percent transition of performing loans into non-performing loans would result in some banks experiencing a significant capital shortfall, the majority of banks possess robust total capital buffers and would remain unaffected by severe shocks to household loans.
Furthermore, the IMF team conducted Bank Solvency Stress Tests, which demonstrated that Botswana’s banking system remains profitable and resilient to severe macro-financial shocks. The stress tests revealed that the aggregate capital depletion in an adverse scenario is relatively small, amounting to less than 0.02 percent of GDP. Although credit risk increases significantly under the adverse scenario, the impact on the capital ratio from rising non-performing loans is outweighed by the increase in net interest income.
The IMF’s assessment also indicates that Botswana’s financial sector weathered the Covid-19 pandemic well. The authorities have made notable progress in strengthening financial supervisory and regulatory frameworks since 2007. The financial sector is deemed stable, sound, and resilient, with risks primarily related to banks’ high concentration of short-term deposits from retirement funds and insurance companies, volatility in diamond prices, geopolitical developments, and tightening global financial conditions. However, the financial system remains resilient to a wide range of shocks associated with these risks, although some vulnerabilities exist.
The Financial Stability Council (FSC), a statutory body led by the Governor of the Bank of Botswana, also recently affirmed the resilience and safety of the domestic financial system. The FSC’s assessment found that the financial sector in Botswana is robust, safe, and unconstrained in providing a range of financial services to support the economy. This resilience is attributed to strong capital and liquidity buffers, profitability, continuous innovation and adaptability, and a robust regulatory environment. The FSC believes that the macroeconomic environment, characterized by positive economic growth, well-managed government fiscal position, and modest inflation, further supports financial stability. Stress tests conducted on banks validate their strong solvency and resilience.
IMF concludes that Botswana’s financial sector remains safe and resilient, despite the presence of high levels of unsecured household loans. The IMF’s assessment highlights the strong capital buffers of banking entities, their ability to withstand shocks, and the overall stability of the financial system. The country’s financial sector has also demonstrated its resilience during the Covid-19 pandemic. The Financial Stability Council further affirms the safety and effectiveness of the financial system in providing financial services to support the economy.
Botala Energy debuts on the BSE
Botala Energy, an Australian energy company, recently made its debut on the Botswana Stock Exchange (BSE), joining a growing number of energy development companies trading on the exchange. The company, established in 2018, is focused on exploring and developing natural gas and renewable energy opportunities in Botswana, particularly in the Serowe Gas Project and Solar Opportunities.
The listing of Botala Energy on the BSE was welcomed by Mr Tsamatse Mamola, the Head of Listings & Tradings at the exchange. He recognized the company as a pioneering force in the field of gas exploration and development. Mamola also highlighted the company’s commitment to clean energy production, which aligns with the global movement towards sustainable practices. By harnessing the potential of coal bed methane in the Serowe Project and integrating it with solar power generation, Botala Energy is not only innovating in the energy sector but also contributing to a greener and more sustainable future.
Mamola emphasized the significance of Botala Energy’s decision to list all of its issued shares on the BSE. This move demonstrates the company’s confidence in the exchange as a strategic partner in its corporate journey. The listing provides Botala Energy with access to diverse sources of capital, which will be instrumental in advancing its exploration and development projects, fostering technological innovation, and achieving its clean energy production goals. The BSE, as a facilitator of capital raising, plays a crucial role in supporting ambitious initiatives and fostering growth.
The listing of Botala Energy also brings benefits to the broader Botswana economy. It increases investor interest, contributing to the liquidity and vibrancy of the market. Botswana, traditionally reliant on diamonds, recognizes the importance of diversifying its economic base. The inclusion of a dynamic and forward-looking company like Botala Energy on the exchange reflects the evolving economic landscape of the nation.
In the pursuit of economic diversification, the Botswana Stock Exchange serves as a bridge connecting visionary companies with investors who share their commitment to progress. By providing a marketplace for a diverse range of industries, from traditional sectors to emerging technologies, the exchange becomes a catalyst for economic resilience and sustainability.
Peter Grant, the Non-Executive Director of Botala Energy, shared some insights into the company’s operations. Since commencing exploration in Botswana, Botala has made significant progress, drilling exploration wells and pilot production wells. The company expects to become a modest producer of commercial gas within 12 months and increase production rapidly. Botala Energy has independently certified gas reserves and prospective resources within its project area, which have the potential to supply significant amounts of gas for power generation.
Grant also mentioned Botala Energy’s focus on delivering Liquefied Natural Gas (LNG) to off-grid communities, providing them with reliable and affordable electricity and gas. The company is exploring the commercial option of establishing an Energy Hub and Industrial Park near Palapye, where it aims to produce energy for Botswana and export it to neighboring South Africa. Additionally, Botala Energy plans to establish a solar/gas hybrid plant in Serowe to feed into the local grid, in collaboration with the Ngwato Development Trust.
Market analysts say the listing of Botala Energy on the Botswana Stock Exchange marks an important milestone for the company and the energy sector in Botswana. It provides the company with access to capital, fosters economic growth and diversification, and contributes to the global movement towards sustainable energy practices. Botala Energy’s innovative approach to gas exploration and development, combined with its commitment to clean energy production, positions it as a key player in shaping a greener and more sustainable future for Botswana.
Beverages dominate Botswana’s food imports
Beverages dominate Botswana’s food imports for August 2023, according to the latest figures released by Statistics Botswana. The country imported beverages, spirits, and vinegar worth approximately P332 million during this month. This is a significant increase from the previous month, where the food import bill slightly rose from P1,063,990,477.2 in July 2023 to P1,233,702,300.4 in August 2023.
The total imports for Botswana in August 2023 were valued at P6,995,115,623.2, compared to P6,897,364,155.2 recorded in July 2023. Food imports accounted for 15.9 percent of this amount, contributing P1,233,702,300.4. Among the food items imported, beverages, spirits, and vinegar accounted for the majority at 26.9 percent. Cereals and sugars followed with 13.4 percent and 8.8 percent, respectively.
Within the category of beverages, spirits, and vinegar, the most imported commodities were mineral waters and aerated waters containing sugar or other sweetening matter or flavored, contributing 47.0 percent. Beer made from malt accounted for 16.7 percent, while fermented beverages and non-alcoholic beverages accounted for 15.9 percent. The import bill for beverages, spirits, and vinegar shows that the country imported mineral waters and aerated waters containing added sugar or other sweetening matter or flavored worth approximately P156 million. Beer made from malt accounted for around P55 million, while fermented beverages and non-alcoholic beverages were valued at around P79.1 million. Wine and liqueurs and cordials were also imported, with values of P12.6 million and P6.4 million, respectively.
In terms of cereals, dried maize excluding seed and other wheat and muslin accounted for 42.3 percent and 27.4 percent, respectively. Rice imports contributed 21.2 percent. The country spent approximately P165 million on cereal imports, with dried maize accounting for around P70 million, wheat around P45 million, and rice around P44.7 million.
Other food imports included preparations of cereals, flour, starch, or milk; pastry cooks’ products, which amounted to around P89 million. Preparations of vegetables, fruit, nuts, or other parts of plants accounted for around P88 million, while sugars and sugar confectionery were valued at around P108 million. Miscellaneous edible preparations, animal or vegetable fats and oils, dairy produce, prepared animal fodder, coffee, tea, and spices, fruits and nuts, meat, vegetables and certain roots and tubers, and products of the milling industry such as malt, starches, and wheat gluten were also imported, with values ranging from P13 million to P74.6 million.
In conclusion, beverages, particularly mineral waters and aerated waters containing sugar or other sweetening matter or flavored, dominate Botswana’s food imports for August 2023. The country also imports a significant amount of cereals, sugars, and other food products. These figures highlight the country’s reliance on imported food items and the need for strategies to promote domestic production and reduce dependence on imports.