Saturday, January 16, 2021

Government issues P 5 billion bond

Linah Mohohlo, the Central Bank governor, has criticized the financial sector for its failure to transfer skills to citizens saying the situation, as it stands right now, is unacceptable.

Speaking at the Botswana government’s launch of the P 5 billion bond, aimed at stimulating the capital markets, Mahohlo attacked the industry for not doing enough to impart the knowledge to citizens.

“After such a long time, we still have a situation where decisions on the pension industry are still done in Cape Town and Johannesburg. I would like to see that changing and the pension funds industry being in the hands of Batswana. We have capable people here,” she said.

The Government issued a P 5 billion bond last week in an attempt to develop the fledgling capital market in the country and, at the same time, to try to develop a yield curve which will be a guide to the industry.

The bond, whose details are still sketchy, is understood to be over-subscribed by many giving confidence to the market that the financial sector strongly trusts the Botswana government.
“I just hope that next time the influence of the South Africans will be much less and Batswana now taking more decisions,” she said, referring to the transactional advisor, Stanbic Bank of Botswana, which arranged the bond.

According to the Bank of Botswana’s website, the latest government bond, called BW005, has a coupon rate of 10 percent and it is due to mature on September 12, 2018.

The latest move is also expected to encourage the private sectorÔÇöespecially the parastatalsÔÇö- to go to the market in a bid to raise cash for their developmental needs. That is expected to help the organizations to have an outward look and expand into other parts of Africa.

“I think this will also encourage the parastatals to raise money,” Mohohlo said.

Government is currently operating through a tight budget and is aiming to liberalise and privatize some of its entities, a move which will spur them to survive on their own.

Some of the issues which government is still digesting are the issuing of an international bond – denominated in foreign currencyÔÇöfor large scale projects if the need arises. However, Finance and Development Planning Minister, Baledzi Gaolathe, said the jury is not yet out and there are no planned big projects in the near future.

The latest issue is part of the government strategy, which started in 2002 and is aimed at supporting the Botswana Stock Exchange and the capital markets in general.

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