The ministry of finance and development planning (MFDP) has reportedly finalised a draft of a transition bill that would see the Botswana Stock Exchange (BSE) no longer operating as a statutory body but rather as a company. Information passed to this publication indicates that the proposed BSE Transition Bill, which could be tabled in the next sitting of parliament, will result in the bourse becoming a company in which government controls majority shareholding.
Insiders at the finance ministry this week pointed out that the promulgation of the BSE Transition Bill will also support the implementation of another bill, the Securities Bill. At the same time, those working closely with the bourse pointed out this week that the transformation of the BSE will necessitate its adequate capitalisation to enable it to perform the functions of a profit oriented entity. Meanwhile going forward, household participation at the BSE could increase, in addition to listing of private corporate securities, given the envisaged involvement in privatisation of parastatals and any increase in government securities. Recently the Bank of Botswana suggested in its annual report that there could be more investment by locals on the domestic bourse as the planned privatisation of government entities gather pace.
The bank said in its 2013 annual report that direct equity shareholding by the household sector through the Botswana Stock Exchange (BSE) amounted to 16.9 percent of total market capitalisation at the end of 2012. Already, privatisation is advancing with Botswana Telecommunications Corporation (BTC) and National Development Bank (NDB) at the forefront.
“Households also invest in the BSE through pension funds and unit trusts,” said the reserve bank, adding that the pension industry had invested a total of P17.8 billion in both equities and bonds by the end of 2012.
“Therefore, performance of the BSE or constituent corporations and issuers of securities has a significant bearing on asset holding and welfare of individuals,” said BoB.
BSE Deputy Chief Executive Officer, Thapelo Tsheole, recently told Sunday Standard that retail participation of citizens on the local bourse was at 8.7 percent of total value of trading while that of foreigners was only 2.2 percent of total trading in 2013. Of the total 10.9 percent of total retail trading on the BSE, 80 percent was that of citizens. Tsheole attributed this level of participation to development of investor-friendly products as well as the education campaign, which has reached the farthest corners of the country.