At a time when there is credit squeeze from commercial banks, business has found it difficult to get funding as lenders have become tight fisted. In this matrix, the industry normally forgets stock exchanges as cheap way of raising capital.
Geoffrey Bakwena, a local stock broker and Chief Executive Officer of Stockbrokers Botswana said over the weekend the capital market, in particular BSE is one way of raising capital at the lowest cost to the issuer.
“The BSE has one of the relaxed requirements for companies that want to raise capital on the market”, said Bakwena who helped a number of companies list on the exchange.
“As a member of the BSE Committee, I can assure you that the BSE is looking forward to assisting you in utilising their platform and raising capital with them”, he said at HATAB open season conference in the resort town of Kasane.
His remarks follow the successfully listing of tourism outfit Wilderness Safaris, which joined Chobe Holdings that has been trading on the local bourse.
Wilderness is a conservation company that is synonymous with tourism in Botswana and run some of the best facilities in the SADC region.
Investment and asset management houses normally invest on these stocks looking at returns as per instructions from pension funds.
Under the law, fund managers are compelled to invest 30 percent of the assets under management, which include instruments on the exchange.
“It is these funds that are available for the tourism sector to tap into to start, expand and/or diversify within the industry from providing one service to the other”, said Bakwena.
“Most of the Fund managers are more than willing to invest in such ventures with good long term returns; this is due to fact that that their liabilities are Pula based and in most cases long term”.
Bakwena said contrary to perception, the tourism industry is a capital intensive sector especially the marketing side.
He therefore called for stakeholders to pull resources together by coming up for example with a separate fund for tourism enterprises.
For example, Safari Adventures said it will be spending couple of millions for its new projects in Moremi (P10 million) although it could tap into funds from P74.1 million sitting on Industrial Development Corporation (IDC) of South Africa.
“The creation of such a fund can be created to be multi- facetted fund to assist in the set up, expansion and diversification of different ventures”, suggested Bakwena.
Wilderness Safaris also spends fortunes in setting up campsites as it is the case with Mombo premier camp in The Okavango Delta, which costs about P30 million.
The other thing about the campsites is they need to be renewed annually to replace timber and timber prices keep on rising.
However, Bakwena advised on the other side of the stock exchange where everything can go burst.
In his last 15 years as a stock broker, he said he tasted both sides of the business as a player and regulator (he was previously CEO of BSE).
He said he saw excellent opportunities being brought to the Exchange which have flourished and made good returns for all investors adding there were also excellent investments that went from good to bad and resulted in the delisting of such investments on the Botswana Stock Exchange.
“It is these bad apples that sour the relationship between the fund manager and the industry in general and we must try and guard against such in the interest of the nation and the tourism sector”.