Bank of Botswana has suggested 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.
“Going forward, household participation in the BSE could, in addition to listing of private corporate securities, increase given the envisaged involvement in privatisation of parastatals and any increase in any government securities,” noted the BoB report.
Already, privatisation is advancing with Botswana Telecommunications Corporation (BTC) and National Development Bank (NDB) at the forefront in government’s ill-fated exercise.
“Households also invest in the BSE through the pension funds and unit trusts,” said the bank, adding that the pension industry has invested a total of P17.8 billion in both equities and bonds at 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”.
BoB also noted that the P15 billion government bonds issuance programme remains in place with only P6.7 billion issued as at the end of 2013. Government’s and treasury guaranteed debt at the end of 2013/14 is projected at P30.9 billion of which P23.4 billion is accounted for directly by the government’s own debt. The total debt is equivalent of 24.3 percent of the forecast GDP–but still in the statutory ceiling of 40 percent.
“The P15 billion Government Bond Program has remained in place and affords an opportunity for development of the capital market, while providing an alternative source of government funding,” said BoB.
The government has increased borrowing from the domestic debt market in the past year and as a result, the outstanding government securities increased from P6 billion at the end of 2012 to P6.7 billion in December 2013.