Q: What is the importance of the BSE to Botswana businesses and the economy of the country?
A: The Botswana Stock Exchange provides a platform for companies to issue equity and debt securities to raise capital for their growth and expansion plans. BSE-listed companies contribute significantly to economic development in Botswana through job creation and contribution to national coffers through tax.
Q: What is the BSE doing to increase interest in private equity fundraising in Botswana?
A: The set-up of private equity is that it is an alternative investment class that invests in or acquires private companies that are not listed on a public stock exchange. Private equity, or PE, is complementary to the listing process in the sense that divestments can take place through a listing on the stock exchange. So increasing interest in PE has the potential to stimulate activity in the listing space in the long-term. The BSE collaborates with private equity firms in Botswana to educate SMEs on how to position themselves for capital raising.
Q: Given the importance of the SME sector to the economy, please tell us about the BSE programmes that focus on developing markets or trading platforms tailored to the needs of SMEs?
A: The BSE is active in promoting inclusion of SMEs through capital raising on the exchange. In 2019, the BSE introduced the Tshipidi SME Board for smaller companies that wish to list and raise capital without being subjected to onerous requirements. Following that, the exchange introduced the Tshipidi Mentorship Programme to assist SMEs to corporatise and list in the medium to long-term. Currently 47 companies have graduated from the programme. The BSE continues to lobby for institutional investors to channel a certain portion of pension fund money to SMEs.
Q: What are the requirements set for SMEs and startup ventures looking to list on the Venture Capital Board and the Tshipidi SME Board?
A: The listings requirements for listing on the SME Board, the Venture Capital Board and the main board provide a detailed indication of what companies have to comply with at the point of listing and on an ongoing basis. They are available on the BSE website www.bse.co.bw
Q: What are some of the benefits of listing on these platforms for SMEs and startup ventures?
A: The benefits of listing on these platforms are as follows: to raise capital for growth and expansion, to allow consumers to have a share in the business, for visibility purposes and to attract like-minded investors.
Q: Would capital market financing as an alternative source of funding for an SMEs be more beneficial as opposed to a bank loan?
A: The two are complimentary, looking at the various stages of growth for the company. However, capital markets provide sustainable and deep pools of capital for the long-term as equity is not paid back, but shares can exchange hands in the secondary market.
Q: Stock markets for SMEs (junior/alternative markets) have been successful in developed economies but have not achieved the same successes in developing economies, especially in Africa. Why do you think this is the case?
A: Developed economies have been leading on a number of initiatives and pioneered the tiered listing markets. African countries have a task before them of assisting SMEs to corporatise in order to list their securities on exchanges. This is why the BSE introduced the Tshipidi Mentorship Programme to teach SMEs about the listing ecosystem and build a pipeline of listings for the SME Board. It is also important for capital markets to collaborate and assist SMEs to meet their capital requirement needs.
Q: What challenges do businesses, particularly Batswana-owned businesses, encounter in meeting the criteria set by the BSE for listing on the bourse?
A: The BSE listing requirements have been developed to accommodate companies of all sizes and risk profiles. For companies that face challenges, it is usually because of lack of corporatisation on the part of the companies. However, the BSE has since implemented the Tshipidi Mentorship Programme to assist companies to corporatise. The other challenge that we see is that most entrepreneurs would rather own 100 percent of a company than sell equity in the business to pursue growth interests.
