Wednesday, November 29, 2023

Transforming Stockbrokers Botswana, leveraging on technology

Mokgosi assumed his new role at the beginning of February this year but he is not new to the corporate world as he has previously served at Local Enterprise Authority as Director Corporate and Stakeholder Communications as well as BIFM under Client relations and Institutional business.

SS: As the new CEO kindly share your strategy for the company?

BKT: Well I can’t get into specifics now but what I will say is I will be transforming Stock Brokers Botswana’s business by leveraging on technology. So this involves a complete re-look at our operating model whilst at the same time taking into account the national heritage of the company as well as matching the expectations of my different constituents. Technology will allow us to enhance efficiency and investor access to the market. Secondly it will enable us to better serve our clients and offer more products.

SS: Kindly share the challenges that come with operating in the stock market space and how you aim to keep addressing the challenges to attract your clientele at Stockbrokers Botswana.

BKT: I believe there are two main challenges. The first, which I believe is the main problem we need to address, is financial literacy. People don’t participate in the stock market not because they don’t have money but rather because they lack the knowledge and understanding of the benefits of investing.

We therefore need to collectively pursue a variety of financial literacy and education approaches to provide information, instruction, and guidance to help Botswana households meet their financial goals.

This is important because the financial difficulties of individuals and families can dramatically affect the financial health of local communities, and it is clear the financial well-being of individuals and families is fundamental to national financial stability.

So we need to rigorously address this problem. This done in tandem with addressing financial inclusion will allow our market to grow (number of investors) and increase market activity (number actively trading).

So access to a transaction account is a first step toward broader financial inclusion since it allows people to store money and send and receive payments. A transaction account can also serve as a gateway to other financial services. As accountholders, people are more likely to use other financial services, such as credit and insurance, to start and expand businesses, invest in education or health, manage risk, and weather financial shocks, which can improve the overall quality of their lives.

The second challenge is access. 75 percent of all BSE market activity happens around the Greater Gaborone area. So there is a need to address this and make sure there is participation in other areas around the country. We at Stockbrokers will soon be addressing this challenge.

SS: What are your thoughts around the local stock market?

BKT: Well our market is still young, its only 28yrs old as compared to the NYSE which is more than 150yrs old. I mention this because some of the challenges we are currently facing have all been faced by other more developed and sophisticated exchanges. So it’s only a matter of time till we are up there with the best. I am confident we will achieve this because of the strength and pro-activeness of our Exchange and Regulator. They are doing well.

Having said that my thoughts are the local market needs more retail investors. I have already talked about how we can get more of them but the current situation is the market is dominated by institutional investors both in terms or activity and liquidity.

Pension funds as a “passive investors” with sizeable presence in the market have significant impact on market liquidity because they often adopt a long-term investment strategy. This may have a negative influence on the level of shareholding concentration, and overall market liquidity.

Secondly we need to address market liquidity. Our market is not as liquid as we would want it to be. A number of factors are behind this and I will touch on a few, the first being concentration of ownership. There is a very high degree of share ownership concentration, to the tune of up to 70 percent in some cases, which is still is still tightly held by its controlling or founding shareholders.

So we need to find an amenable solution where the founding shareholders can retain control of the company whilst floating more shares.


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