Although Botswana, like the rest of sub-Saharan Africa, has Internet connectivity challenges, online stakeholder communication will have to be adopted in future as a means of investor relations (IR).
Rob Stangroon, CEO of African Is Cool (AIC), an online IR consultancy firm said this week that online is the future of communication, but acknowledged that Africa’s needs are different unlike in the US where communications is 100% technology based.
“The barriers are Internet penetration in Africa and the laws that state that there should be physical delivery of annual reports, but this can be changed”, said Stangroon.
“There are barriers, but they are not insurmountable”. However, in Botswana it seems the laws are flexible because electronic annual reports are allowed although that should be accompanied by physical delivery.
African Is Cool was in Gaborone to sell its ideas to the investment community that included Botswana listed companies, Botswana Stock Exchange (BSE) representatives and stock brokers.
The company specialises in online stakeholder communications and IR based on best practices. It uses the Internet to create and grow an online investment community.
African Is Cool uses US Sarbanes Oxley Act compliant softwareÔÇöInvestorpass–which is hosted in Texas, US. Already over 300 companies use this software in the US.
The software creates a sub mail for every investor and it is low maintenance since the security and upgrades to the software are handled online.
Stangroon said Africa needs a different formula on top of the problems of illiquidity, but added the advantage of Internet is that you can communicate with a larger number of people and that it is cheap.
For Botswana, the problem will be Internet connectivity as investors in Botswana share market are spread around 120 villages. This is unlike in the US where Internet penetration is more than 90%.
However, this could be mitigated by the use of mobile phonesÔÇöin a country that has high mobile penetration–to receive updates for company announcements like dates for Annual General Meetings (AGM) or dividends announcement.
It is happening already in Kenya where Internet penetration is still a problem in rural areas and possible in countries like South Africa where mobile phone penetration is said to be 100%.
Hiran Mendis, CEO of Botswana Stock Exchange (BSE) revealed that they are planning to have exchange branches in ‘key areas’ around the country to take services to the people.
“In Botswana, if an investor makes an effort to purchase shares, they should also make an effort to receive information”, advised Stangroon.
Less than 29% of African annual reports are online with most of them still being delivered physically.
Alun Thomas of Imara Africa Securities revealed that lack of information is one of the major obstacles to investing in the frontier markets of Africa.
“The liquidity always come up, but lack of information comes first”, he said adding winning companies ‘are good communicators’.
Thomas said these successful companies use the Internet as their main conduit for communication with stakeholders including shareholders.
However, he said using Internet as a communication methodology requires management adding that it is not without pitfalls.
“Many companies have out to date information”.
African Is Cool, which has over 15 clients across Africa, has made similar presentations in Zambia and Kenya.
Its clients’ market capitalisation exceeds US$1.2 billion and serves over 75, 000 shareholders in its online investor community.
Currently, it manages investor relations website of Kingdom Meikles, Econet and Celsys in Zimbabwe and it is currently signing on two other Zimbabwean listed companies.
In Botswana, it manages Imara’s online investor relations and in Zambia Copperbelt Energy’s website and IR functions and has three clients in Malawi.
The cost of putting and running the IR website depends on line of functionality, but Stangroon said it could be in the region of P55 000 ÔÇô P150 000 annually with a fixed retainer.