The Botswana Stock Exchange Limited’s celebrated its 30th Anniversary as part of activities for the April 2019 edition of the Opening Bell Ceremony Wednesday morning.
“It seems like it was just yesterday when the national stock exchange operated as an informal market in 1989 under the name, Botswana Share Market (BSM). During this period, the Botswana Share Market was a modest market with only five (5) equity listings and one (1) brokerage firm,” said Tebogo Masire, Chairman of the Botswana Stock Exchange (BSE).
He said, “In spite of this, the buoyancy of Botswana’s economy led to more companies and more stock brokers coming to the market and ultimately led to the formalization of the market through the Botswana Stock Exchange Act of 1994.”
The formalization of Botswana’s local capital market gave way for the introduction of proper corporate governance structures that ensured compliance with rules and regulations by participants and the promotion of market development by the Exchange.
Evidently, this brought about integrity and confidence in the market, ultimately paving the way for more issuers and investor participation and improvements in technological infrastructure through the commissioning of the Central Securities Depository Botswana (CSDB) system in 2008 and the Automated Trading System (ATS) in 2012.
“30 years later, we stand strong as the second largest stock exchanges in Sub-Saharan Africa after the JSE. As such, today we tell our story as we aim to center the conversation on the growth and development of the national stock exchange and how it has contributed to Botswana’s economy in the past 30yrs,” observed Masire.
As of 2nd August 2018, the Botswana Stock Exchange fully demutualized following its conversion from a mutual exchange to a company incorporated under the Companies Act of Botswana to become Botswana Stock Exchange Limited. Previously, the exchange was owned by its members (stockbrokers), through ownership of Proprietary Rights, and the Government of Botswana.
The Botswana Stock Exchange commenced the demutualization process on the 1st December 2015, as means to eliminate conflict of interest between the exchange and broker members through the separation of ownership and control of the stock exchange from trading rights of its members. This development with time, will propel the stock exchange into greater heights as we intend to drive value for all our stakeholders.
“We have now joined an elite group of stock exchanges as this achievement has made us the 7th Stock Exchange in Africa, out of about 28 to demutualize,” said Masire.
The evolution of the development of the Botswana Stock Exchange dates back to study by the International Monetary Fund in 1989 entitled: “Botswana: Financial Policies for Diversified Growth”. Among the recommendations of this study was one on the establishment of the securities market.
Since the adoption of the recommendations of study, the Government has been taking positive steps to promote the development of capital market, and in particular, securities market.
Several pieces of legislation aimed at facilitating the growth of the Botswana Stock Exchange have been developed, including the Botswana Stock Exchange Act 56:08 of 1994; Collective Investment Undertaking Act 56:09 of 2001; Securities Act 2014; and Botswana Stock Exchange Transition Act 2015.
The latter Act, which provided for the demutualization of the Botswana Stock Exchange, positioned the Exchange to efficiently play its promotional role in encouraging public offerings.
“In addition to legislative reforms, the Government has also provided some tax incentives to provide a stimulus to companies to go public and investors to buy listed shares on the Stock Exchange. The incentives include no payment of tax on capital gains, provided the stock/share has been held for more than 12 months; and low tax of 7.5 percent on dividends, as final tax,” said Kenneth Ontefetse Matambo, Minister of Finance and Economic Development in official opening remarks.
He said, “The theme of today’s event of ‘Celebrating 30 Years’ captures the spirit of the journey that the Stock Exchange has traversed, both in terms of its growth as well as its impact on the development of the domestic capital market.”
According to officials the Botswana Stock Exchange serves as a barometer of economic health in Botswana and continues to give the right signals to the international market for inward investment.
