Friday, October 30, 2020

“There is abundant capital in Botswana”-experts

Ask any businessperson in Botswana what their challenge is, the likelihood is that the answer will be “lack of finance”. However, local experts differ, as they believe the country is blessed with various suites of funding opportunities for businesses.

Former Deputy Chief Executive Officer at Citizen Entrepreneurial Development Agency (CEDA), Lesego Selotate believes Botswana has not had a challenge of financial constraints. Rather, says Selotate, the biggest problem facing business in Botswana is lack of skills from project promoters to convert their ideas into success.

“A lot of times we could not finance these projects because of packaging. People could not articulate their ideas,” he said of his time at CEDA. For example, he says, a person wanting a P30 million loan will present a three page document, which in actual fact will need a lot of intellect. While he admitted that there are a lot of entrepreneurs who have challenges of finance, Selotate insisted that there is plenty of capital in Botswana. He was speaking about on Capital Markets, Entrepreneurship and Diversification at a conference on economic diversification organised by Botswana Institute of Development Policy Analysis (BIDPA), the country’s economic think tank, in collaboration with University of Botswana’s Department of Economics and Friedrich-Ebert-Stiftung.

“Maybe it is high time we import skills offshore so that they run these businesses for a short period of time,” he said.

Deputy Chief Executive Officer of the Botswana Stock Exchange (BSE), Thapelo Tsheole told the conference that the stock market could be used as an avenue for economic diversification. For example, he said Botswana is different from South Africa because the JSE does not do product development while at BSE it is done internally.

“We do not have investment banks and that is an area we should use for diversification,” he told the conference.

The BSE has seen an improvement in activity over the years as there has been a rise in daily turnover. About P9.4 million changes hands daily at the exchange, which Tsheole said is another area of diversification as these transactions are made possible by stock broking firms and banks. Tsheole revealed there is plenty of cash in the market, but limited investment opportunities which results in the money ending up offshore.

“There is no investment in this country. There is excess liquidity in the country,” he said.

He added that as a sign of heightened appetite in the market, the 2012 Choppies Initial Public Offering (IPO) was four times oversubscribed.

“There was so much demand that the stock was more than twice oversubscribed,” said Tsheole.

Other innovative products in the market include Exchange Traded Funds, with three listed so far and a possibility of more before the end of the year. The BSE recently listed a NewPlatinum ETF on top of the NewGold ETF and BettaBeta ETF. Tsheole explained that the BSE is trying to improve efficiency of domestic capital before exporting capital. He added that a lot of companies want to emulate Choppies and list. Botswana is currently sitting on billions of Pula in contractual savings from pension funds and insurance which needs bankable private sector activities. There have been calls for issuance of infrastructure bonds by the treasury to fund major projects including part of Kazungula Bridge.

“There is no reason to go outside the country to get P2 billion to finance Morupule B when we have money locally,” said Tsheole.
Vice President of Africa Investment Banking at Barclays Africa, Boikanyo Kgosidintsi said there is no issue on availability of capital as the market is awash with capital. He said parastatals like Botswana Railways and Water Utilities Corporation present opportunities for listed instruments in the BSE.

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