Botswana’s capital market is said to be doing well when compared to other countries with the same size of economy. According to Director of Capital Markets at Non-Bank Financial Institutions Regulatory Authority (NBFIRA) Juliana White, the local capital market is doing well and it is not far from Mauritius, a country which is considered the epitome of both capital and financial markets in the continent. White was part of the panel that discussed the role of the legislation in facilitating listings during the third Annual Botswana Stock Exchange (BSE) Listings and Investment Conference in the capital Gaborone on Thursday. She believes Botswana has a large market capitalisation and ranked it as one of the best in the continent in terms of the capital markets and regulatory frameworks. The BSE has been hosting the annual listings and investment conference since 2016 when the current Chief Executive Officer Thapelo Tsheole assumed the role at the local bourse. The initiative is aimed at attracting local companies to consider listing to raise capital and enable citizen participation in those companies doing business in Botswana. Statistics show that the initiative might be bearing fruit as 2017 was a record year for the bourse in terms of listings. A total of three companies and eight bonds were listed with listings raising a total of P575 million, whereas bonds including additional issuances by government raised over P3.3 billion.
The BSE also for the first time listed international bond named Kgalagadi bond by the International Financial Corporation (IFC) and its first ever US Dollar denominated bond issued by Investec. Since the inception of the initiative three years ago, a total of five companies have issued shares on the BSE. In order to make the BSE attractive and conducive for small firms, it completed the rules for a new listing board called Tshipidi Small to Medium Enterprises Board. The board will enable SMEs to raise capital under less stringiest listing requirements and the rules are awaiting approval from the regulator, NBFIRA. Tsheole recently told this publication that the appetite by the companies to list has multiplied since the came up with the conference and said inquiries have recently went a notch up after the BSE announced the introduction of the Tshipidi SME board. In some parts of the continent, listing is said to be mandatory enforced by existing legislative instruments that compels companies to list on their respective stock markets. This question popped up on Thursday whether Botswana should also take that route and introduce the same legislation. A Managing Partner at Rantao Kewagamang Attorneys, Kelebogile Kewagamang-Garebamono, said there is a huge potential in the local market and sufficient liquidity supported by pension funds.
She said all these could afford companies to list of the BSE but was reluctant to suggest that a law should be introduced to force companies.
With all the potential in the local market, Kewagamang-Garebamono said one would say mandatory listing may be the answer, but on the other hand it has to be considered that listing is a costly exercise and the result would be that the introduction of such law might drive away investors. She said if mandatory listing was to be introduced, there has to be some incentives to it such as tax rebates and others. Trade Policy Advisor at the Ministry of Investment, Trade and Industry, Dr Joel Sentsho – who was part of the panel which discussed the role of a stock exchange in facilitating economic growth and diversification – believes the BSE plays a critical role in economic diversification. He said there has been a significant improvement on economic diversification but said mining is still the source of economic growth. However, services are expected to be source of growth in 2018 while mining is also expected to play a significant role buoyed by the diamond industry. Dr Sentsho noted that by listing, such companies give an opportunity to individuals to have shares in those companies and the growth of those companies contributes to economic diversification.