Just like the absence of empowerment legislation, government is not in
a hurry to enact a law that will compel large corporations that come
into Botswana to float their shares on the local bourse in a bid to
have citizen shareholders.
Rather, government will allow the free market economy to dictate and it
will be up to foreign companies to decide whether they want to list or
not.
“….there is currently no law that compels large corporations/
companies to list on the Botswana Stock Exchange (BSE) when they reach a certain threshold in their balance sheets,” Vincent Seretse said on
Thursday on behalf of Minister of Finance and Development Planning,
Kenneth Matambo.
“My ministry has no intention of coming up with such a law in the
immediate future because Botswana is a free market economy where
companies should be free to set up. I am of the view that it is best
to let companies consider listing as a voluntary exercise based on the
company’s strategy,” he added.
The Ministry of Finance and Development Planning was responding to
queries from Tonota MP, Fidelis Molao on whether there is a law that
compels big companies to list on the BSE when they reach a certain
threshold on their balance sheets to accord Batswana the opportunity
to buy shares.
Normally companies list on a stock exchange in order to raise money
and also empower citizens of a particular country. Recently BSE Deputy
Chief Executive Officer, Thapelo Tsheole, told Sunday Standard that
the retail participation of citizens on the local bourse was at 8.7
percent of total value of trading while that of foreigners is only 2.2
percent of total trading in 2013. Of the total 10.9 percent of total
retail trading on the BSE, 80 percent is that of citizens.
Molao also wanted to know whether government will consider such a law
and the minister to state the opportunity costs for not having such a
law as against having it. Seretse said government is not in a position
to quantify opportunity costs for not having a law compelling to float
share on the BSE.
“However, I am confident to state that there are benefits that accrue
to our economy as a result of companies setting up businesses in
Botswana because of the relative ease of doing business. These include
development of infrastructure, creation of employment and revenue
generation through taxes,” said Seretse.
“In addition, some of the foreign companies form partnerships with
citizens thereby giving Batswana direct ownership in those companies.
To instigate a law compelling companies to list on the stock exchange
will be unnecessary encumbrance bound to discourage doing business in
Botswana”.
However, Seretse pointed out that government recognises the importance
of companies listing on the exchange hence the ongoing efforts to
develop the capital markets. He said currently, the government is
reviewing the Botswana Stock Exchange Act to include trading in bonds
and other financial instruments.
“Further to this, the BSE market development strategy is focused on
both the supply and demand side and the exchange has outreach
programmes on public education and motivating companies, both small
and large, to list and issue bonds.
“This will be complemented by broader efforts from government
associated with privatisation initiatives.”
