The CEO of the Botswana Stock Exchange, Thapelo Tsheole, was recently in Mauritius to participate in the First Pension Funds and Alternative Investments Conference held in Balaclava. He has extensive financial markets experience in Capital Markets, Forex, Structured Products and the Financial Market Regulation. The CEO is a firm believer in the development of the financial market in Botswana and Africa, as well as in their importance to economic growth and stability. It is against this backdrop that he has led initiatives to increase activity in the financial market in Botswana.
BSE recently hosted the second listing conference. How can the funding help start-ups and SMEs establish themselves on the market?
The Inaugural BSE Listings and Investment Conference came on the backdrop of the need to educate the market about listing and investing in the stock market. The conference certainly succeeded in demystifying the misconceptions that exist about listing on the stock exchange and provided a platform where companies can learn about the process of listing on the Botswana Stock Exchange. What made the conference dynamic is that there was a mix of listed and unlisted companies, corporate advisors, as well as capital market participants to deliberate on the different topics of discussion. Certainly companies are becoming more and more knowledgeable about the process of listing, and outside of the conference we continue to engage companies on a one on one basis. By using the stock exchange for capital raising, SMEs will be able to achieve their growth and expansion plans. The capital raised will enable companies to expand their products and services locally and even in Africa like some companies have been able to achieve.
Do you think that stringent listing requirements act as a barrier to the growth of medium sized companies?
Certainly stringent listing requirements can be barriers for companies that are unable to attain the requirements of the board and are unable to list and raise capital, but stock exchanges have realised this limitation and have multiple boards to cater to companies of different sizes and risk profiles. The Botswana Stock Exchange (BSE) has a multi-tier market that is designed for enterprises that fall within different stages of growth, and of different sizes and risk profiles.
Only two boards, the Main Board and the Venture Capital Board, have been catering for enterprises that list on the exchange, with the Venture Capital board having less stringent requirements to those of the Main board. In ensuring inclusion especially of the SMME sector, the BSE is working on the rules for the Tshipidi SMME Board which will cater for companies that are currently unable to attain the Venture Capital Board.
What will be the aim of the new board, Tshipidi where SMME can list?
The BSE has decided to launch the Tshipidi SMME Board to satisfy the capital-raising needs of Small Medium and Micro Enterprises (SMMEs) by providing a direct financing platform for enterprises with a growth potential. This will address the challenge of access to capital that SMMEs face. The Tshipidi SMME Board will cater for the enterprises that are not able to meet the requirements of the existing boards by providing less onerous listing rules that are appropriate for their stage of development, while at the same time maximizing market efficiency, facilitating risk control and developing the capital market.
It is worth noting that, as the BSE, we have the responsibility to develop the market and we continually review the current infrastructure and its suitability to act as a catalyst for growth, particularly that of SMMEs given that Botswana is predominantly an SMME dominant economy. The Tshipidi SMME Board will be launched sometime in 2017 and the drafting of listing rules for the board has commenced.
Do you see any future collaboration between BSE and Stock Exchange of Mauritius (SEM) in the near future?
Yes, the Stock Exchange of Mauritius is one of the best performing in Africa and there is an opportunity to collaborate on various platforms and information sharing initiatives to develop capital markets in Africa. There is a clear symbiotic relationship in the sense that both exchanges are pushing towards African securities exchanges being drivers of economic transformation in Africa, individually and collectively.
What role can BSE play in raising capital for not just Botswana, but for the entire continent as a whole?
The BSE is available for both domestic and international companies that wish to list instruments for capital raising to expand their products and services. Botswana is blessed with a situation where there is too much money chasing limited assets. That is, there is excess liquidity in the capital markets.
As at the end of 2016, local Pension Funds alone had total assets P75.1 Billion. 60.1% of these assets are offshore investments, while only P18.3 Billion is invested on BSE listed securities. However, the Pension Funds’ inclinations towards offshore investments is not because of a lack of appetite for domestic assets but because they aren’t enough to take up.
Botswana’s comparative and competitive advantage echoes the country’s position as the right destination for issuers and investors. The country’s comparative and competitive advantage hinges on the following;
- Highest sovereign credit rating in Africa
- Stable currency
- Liberalized Market
- No exchange controls
- Enforceable property rights
- Strong capital/Excess savings
- Rule of Law and political stability
- Geographical location within the SADC regions
- Trade agreements in place
Source: Article by Vishal Bheeroo