Sunday, November 28, 2021

UDC recommends buying shares with Constituency Fund money

Of the raft of suggestions that the Parliamentary Caucus of the Umbrella for Democratic Change has made with regard to the administration of Constituency Fund, one will particularly resonate with a lot of people.

The Fund guidelines outline seven broad areas for community investment, one being “SME and Business Development.” The latter entails “Training of hawkers and businesspeople on management and facilitating business development by supporting initiatives for access to funding and markets.”

Stressing the need for the Fund to meet “a need that the normal government budget process fails to meet”, the UDC has proposed a reconfiguration of the development initiatives.

“Some of the monies should be invested in shares so that the community can start its own wealth fund for the future,” says UDC’s Vice President and Gaborone Bonnington South MP, Ndaba Gaolathe.

The MP has reconfigured what the Constituency Fund categorises simply as “SME and business development” to “Entrepreneurship and Business.”  As to how much should be used to buy shares, the MP suggests 5 percent to 12 percent of this allocation being invested into any profitable businesses, shares included.

“Part of this money can be used to grant small loans to community SMEs and some of it invested in shares.  This leaves 90 percent to be spent on immediate community needs,” he says.

His general view is that there is a lot of confusion around the administration of the Constituency Fund. 

“Government doesn’t quite know how to do it,” he says adding that he has already conveyed his views about the matter to the concerned minister and at a later stage, will address his own constituents “so that we, as community, at least have a systematic way of thinking about how to find our own consensus.”

The point about “our own consensus” is with regard to his conviction that constituencies should eschew a one-size-fits-all approach in favour of development initiatives that meet the specific needs of respective constituencies.

As the Botswana Telecommunications Corporation Limited (BTCL) initial public offering showed, Batswana are developing a lot of interest in the stock market. At the company’s first IPO grand assembly (Pitso) in December 2014, the entire Gaborone International Convention Centre was literally packed to the rafters. The company stock didn’t get off to a good start after BTCL listed but in no way has enthusiasm for this alternative form of investment been dampened in what is largely a cattle-rearing country. However, knowledge of how the stock market works is rudimentary to non-existent among a sizeable portion of the population. Gaolathe doesn’t think that this will be an impediment.

“You don’t need to be an expert at investment. That is why we have investment advisors and stockbrokers and volunteer experts within the community on whose advice communities will make investment decisions,” he says. 

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