Tsheole calls for Overhaul of Privatization Policy
• Says focus should be on privatisation of SOEs • Wants asset management industry overhauled • Finance PS affirms govt support for BSE
The CEO of Botswana Stock Exchange, Thapelo Tsheole, has called for an urgent overhaul of the existing privatisation policy and privatisation of state owned companies that should right away list on the bourse.
Speaking at the Opening Bell ceremony at the BSE in Gaborone on Monday, Tsheole also spoke of a need for financial inclusion of Batswana and noted that the number of Batswana investors had grown from 23 000 to 96 000 over the past five years.
Speaking at the same ceremony, the Permanent Secretary in the Ministry of Finance and Economic Development, Dr Wilfred Mandlebe, noted a disturbing trend of companies de-listing from the Botswana Stock Exchange (BSE), saying the tendency is the opposite of what Botswana needs,
Mandlebe said the “worrying trend of de-listings” must impel the BSE to monitoring the situation with a view to ensuring that there is a balance between costs and benefits of listing on the bourse for companies.
He pointed to low liquidity and limited secondary market trading on the BSE as aspects that require attention. “I appreciate that the Botswana Stock Exchange has devoted efforts to outreach in order to improve awareness and encourage share ownership and trading,” he noted. “However, continued efforts are needed in this area. Another area for improvement is that of market efficiency, where there is need to reduce on the time taken to settle share transactions.”
Dr Mandlebe said the BSE is advanced in terms of technology and systems. Yet, he noted, there is a need for an integrated depository that includes both corporate and government bonds, thereby obviating the need for the Bank of Botswana to maintain a separate depository for government bonds. “This integrated depository must be linked to major clearing systems globally such as Euroclear, which is necessary to encourage foreign investors to purchase government bonds,” he said.
The CEO of the Botswana Stock Exchange, Thapelo Tsheole, had earlier called for government support for the BSE in order for it to grow. There is need to incentivise companies to list on the exchange. “Most developed and emerging markets and frontier economies have significantly made strides in incentivising companies that have taken a deliberate decision to issue securities on a stock exchange to promote citizen economic empowerment,” Tsheole observed.
“Such incentives extend to tax and preferential treatment on procurement of services by the government. Government has to take a deliberate action to position Botswana as a destination for raising capital. The model of companies being headquartered or operating in Botswana and expanding to the rest of the continent has been tested as the BSE has a good number of foreign companies listed,”
Tsheole also called for improvement in financial inclusion of Batswana. But this will require benchmarking from peer markets to tailor-make regulation that promotes capital market development and inclusion. Tsheole said Botswana needs to develop a long-term capital market strategy that will contain clear deliverables and proper timelines.
He called for an urgent overhaul of the existing privatisation policy and privatisation of state owned enterprises. “A robust privatisation plan for state owned enterprises with clear timelines needs to be developed and implemented to promote efficiencies and promote private sector-led growth,” he said. “The African Stock Exchanges Association (ASEA) is launching a study on SOE listings soon.”
Tsheole is the Deputy Chairperson of ASEA. He called for more support for SME listing as the sector contributes close to 80 percent of total employment on the African continent. SME financial inclusion in particular can unlock economic diversification and growth prospects for the Botswana economy.
He also called for an overhaul of the asset management industry, especially pension funds.