He says currently, companies can list on the Main and Venture Capital boards, adding that the two have different requirements with the Venture Capital board having less stringent requirements than the former.
“We still see the need to encourage SMMEs to raise capital on the BSE under even less onerous requirements. Most SMMEs in Botswana are generally small in the sizes of their operations, revenue profiles and their capital needs,” he explains.
Further, Tsheole said SMMEs may require time to build resources and capacity in order to fulfill the existing listing requirements, adding that hence the need to craft requirements that can be more appropriate and appealing to them by creating the Tshipidi SMME Board.
“And looking at the growth stages of some of these companies, the cost benefit of accessing the stock market may be eroded by the onerous requirements and also the cost implications,” he says.
Tsheole is of the view that the most important thing is that the board is aligned to their mission of driving sustainable economic development of Botswana.
He observed that globally, SMMEs generally make up over 90 percent of the total number of businesses and represent over 60 percent of private sector jobs. He believes that as such they are an important institution within the economy.
He says, however, most do not realise the full potential and eventual demise, and the major impediment is the lack of access to finance.
“If we enable them to access capital through the BSE, we believe we are giving them an opportunity to grow, explore new markets and be sustainable business entities that contribute meaningfully to the Gross Domestic Product,” says Tsheole.
His observation is that a number of entities listed on the BSE started at a very low level as small businesses in small towns and villages, but they have since grown to become Pan-African brands following their listing on the BSE which helped them access capital to broaden their products and services.
He says BSE wants to make this possible with businesses in Botswana whose growth are currently limited by finance so that they can ultimately create jobs, add to the economy and unlock value for their shareholders.
He adds that what gives them confidence is that Botswana has deeper pools of institutional funds that need investments. He says unfortunately, the funds ultimately end up being exported offshore without creating adequate value locally, adding that if SMMEs list in a regulated environment such as the BSE, they will have the opportunity to utilise these funds.
“Any enterprise that will find the Tshipidi SMME Board listing requirements suitable to them will qualify. As the word “Tshipidi” signifies, these will predominantly be companies that are still at their lower phase of development and that can graduate to the existing boards overtime,” says Tsheole.
He says another observation is that in most cases, these are companies which are founder owned and have been quite successful at their level of operation and have the potential to grow over the short, medium and long term.
He adds that they are targeting companies who are struggling to access finance from the traditional financial institutions either due to lack of track record, collateral or just their business profiles.
