Botswana Stock Exchange (BSE) has urged local companies to expand into Africa, saying such expansion is critical because the small size of the local market can be limiting.
BSE Deputy Chief Executive Officer (CEO) Thapelo Tsheole said in an interview that Botswana companies can leverage on existing resources to seek growth in Africa. Tsheole also said government has to aid and encourage such expansion through different bilateral agreements.
“Lessons can be learnt from BSE listed companies that are already pursuing the strategy. The growth dynamics in Africa make this a viable strategy,” said Tsheole.
He gave an example of expansionary companies such as Turnstar Holdings, Choppies, Letshego and Cresta, saying they will gain access to bigger markets in Africa which will aid growth across their value chain.
On the companies’ value addition in financial services, Tsheole stated that the financial services sector has been one of the fastest growing sectors in Botswana, adding significant value to the economy in the past decade. He further said Botswana has abundant national savings, particularly pension fund savings. The BSE deputy CEO said as at February 2015, P32.5 billion which is 56.8 percent of pension fund assets was invested offshore and therefore could not create significant value in Botswana.
“The financial services sector has great potential to become an important source of job creation, particularly the pension fund fraternity,” he said.
He is of the view that pension fund industry is not being harnessed optimally because of its high offshore ratio adding that it is where Botswana is leaking jobs and opportunities for growth and rather promoting economic expansion elsewhere in the world. He said it must be noted that the management and regulation of pension funds assets must be in the best interest of the pension fund members or beneficiaries.
“Fast tracking implementation of the PPP policy is important. Botswana finalized the PPP Policy in 2009, but execution and implementation has been slow,” said Tsheole.
He further said PPPs attract and nurture a broad set of skills and talents that can relieve fiscal pressure from government and help promote innovation in the private sector. Tsheole said the pre-cursor in promoting PPPs is to build technical expertise, which is legal and technical to ensure that both government and the private sector players are duly protected.
“Coordination of policies and programmes within government and the private sector could be improved. It is wiser to avoid “silo mentalities” in pursuit of isolated victories and rather promote policy alignment,” he stated.
He emphasized that Botswana companies should look beyond local constraints to search for growth across Africa and also utilize vast domestic resources to achieve growth elsewhere. He added that financial services should consider capacitating local human capital to international standards and also maximizing potential of pension savings to drive growth and job creation.