After years of near misses and aborted efforts, PEEPA finally has an asset to pride itself with having sold to the public. Many citizens are tripping over each other in a race to acquire BTCL shares. No wonder Kgotla Ramaphane – PEEPA CEO – is the man of the moment. He talks to KABELO ADAMSON
In a week which saw what is described as the major transaction of a public entity, CEO of Public Enterprises Evaluation and Privatisation and Evaluation Agency (PEEPA) Kgotla Ramaphane has expressed happiness that at long last his organisation has delivered on its mandate - privatising of Botswana Telecommunications Corporation Limited (BTCL). On Friday, Patriot Business met with Ramaphane at the PEEPA offices at the Fairgrounds to discuss the privatisation of BTCL which is the first public institution to be privatised. He also touched on other privatisation plans that are currently being considered and why other privatisation of other institutions never saw the light of the day. The BTCL privatisation model, which was chosen by the government to list the company on the Botswana Stock Exchange (BSE) resulted in some delays with postponement after another, but Ramaphane believes the wait has been worth it. Ramaphane says BTCL IPO is an opportunity the government is availing to citizens to own national assets and urges locals to take advantage of it.
Background on BTCL privatisation
Ramaphane explains that the process of privatising BTCL has been ongoing for some time, with many hurdles to be cleared and lot of consultations to be made. “The privatisation of BTCL comes about after the government adopted the Privatisation Policy of the year 2000,” he says about the policy that has several objectives. “One of them was to improve efficiency and productiveness of the public enterprises,” he says. The policy was also looking to increase direct ownership of national assets through public participation; to help improve the rate of economic growth through stimulating investment and entrepreneurship in the country by involving the private sector. “Another one is to ensure that we reduce the financial and administrative burden that the government incurs because of the ever increasing network of services, especially where the private sector is available to provide those and finally to broaden the capital markets,” he says.
Following on the privatisation policy, a Privatisation Master Plan was crafted in 2005 which Ramaphane says identified Botswana Telecommunications Corporation (BTC) as the organisation was known then, as an entity that was ready and feasible for privatisation. Next after the enterprise was identified, PEEPA embarked on privatisation journey which according to Ramaphane involved a lot of issues. “There were a lot of steps to be followed and one of them is that BTCL was initially established as a statutory corporation through an Act of Parliament. And there was a need to change the legislation,” he explains, adding that in 2008 the government came up with BTC Transition Act which was to pave way for the corporation to be converted into a company under the Companies Act. In 2010, Ramaphane says a decision was made by the government to privatise BTCL and chose Initial Public Offering (IPO) as the suitable model of privatisation which was believed to be perfect for citizen economic empowerment.
Public outreach and share allocation
The IPO opened on Monday to an overwhelming reception from the public. PEEPA, together with other stakeholders involved have lined a series of roadshows countrywide which will add to other channel of communication currently being used to relay the message such as social and mainstream media. Ramaphane says the roadshows will be conducted throughout the country to reach as many Batswana as possible about the benefits of investment with the first installment of the roadshow scheduled for Monday the 18th of January in Mahalapye. PEEPA also aims to recurrently compile a list of Frequently Asked Questions (FAQ) that will be inserted in newspapers.
The offer period, which opened this past Monday will run until the 4th of March, will see all those who have applied get a portion of the shares on offer and no one will be left out, according to Ramaphane. “There will be an Allocation Committee which will consolidate all applications and reconcile and determine how much has been offered,” he explains, adding that in case there is an over-subscription, there will be a formula that will ensure that as many Batswana as possible get what they have offered to buy so that no one is left out. “In other words there is going to be a deliberate move to ensure that as many Batswana as they have offered to buy the shares are allocated a certain amount shares depending on the response we received,” he says.
What caused the delay of BTCL IPO?
“Yes, there were postponements but what excites us is that it is here and happening,” he declares. “One thing you have to bear in mind is that the privatisation of BTCL is the first major transaction undertaken by the government. There were lot of processes and preparatory work that had to be undertaken and as the preparatory work was being done, there were lot of things that had to be cleared before a final decision could be made,” Ramaphane notes. He says the delay has been worth it as it allowed all the concerned an opportunity to tell Batswana about the privatisation of BTCL. “It has also allowed continued debate and discussions about the privatisation of BTCL which created awareness to some extent. It has enabled us to see how BTCL is planning its future and allowed BTCL to come up with a solid strategy that would be used to market the IPO,” he remarks.
Air Botswana case and the future
The national airline was at some point on the brink of being privatised to allow it to be run by the private sector with a view of resuscitating it but the process was abandoned at the 11th hour due to reasons beyond PEEPA. “There was a lot of work that was done concerning the privatisation of Air Botswana,” recalls Ramaphane who joined PEEPA in November 2007 as Head of Department-Perfomance and Monitoring, during the time when the privatisation of the airline was being discussed. “The government decided to defer the privatisation plans of Air Botswana after realising that the aviation environment was not favourable at the time.” Will the privatisation of Air Botswana be considered again in the future? “That is a decision that will be made by the government,” he answers but confirms that the process was abandoned when a lot of work was done.
The next privatisation process that PEEPA will engage in is that of National Development Bank (NDB) – a statutory bank currently undergoing commercialisation which will lead to its ultimate privatisation. “When the commercialisation process is complete, we will monitor its performance and then it will convert to a company before all the processes of privatisation can begin,” Ramaphane says. He says the model chosen to privatise NDB is similar to the one use in BTCL- through the IPO and will also be publicly listed on the BSE. Ramaphane says they will soon embark on a Privatisation Master Plan 2, which will be followed by a study that will determine what next step to take and advise the government accordingly.
Privatisation of public enterprises in Botswana
Responding to a suggestion that most parastatals in Botswana should be privatised as most of them are perennial loss makers, Ramaphane says privatisation cannot happen based only on poor performance of the organisation but looking at a bigger picture such as benefits of that privatisation. He, however, believes the timing now is right for privatisation as parastatals have been run by the government since independence but acknowledges that the decision was right at the time for the government to run those institutions. “The government was looking at the welfare of the public, services that were needed and with passage of time we have seen growth and also the government revenues were decreasing and government had to involve the private sector in the development of the economy,” he says.
Ramaphane says the country has to move with times and adjust to the current economic landscape by allowing the private sector to have a meaningful participation in the economy. Privatisation of public enterprises, Ramaphane says, is not just a simple exercise that can be concluded within a short period of time as evidenced in the case of BTCL which took almost six years since the decision to privatise the company was made in 2010. “Privatisation involves lot of stakeholders, the public, the private sector itself, trade unions and political leadership and all of them have to be taken on board and this requires a lot of effort and consultations,” he maintains.