A ringing warning

Kabelo Adamson
CONCERNED: Dr Mandlebe

Finance PS concerned at companies delisting from stock market

Permanent Secretary (PS) in the Ministry of Finance, Dr. Wilfred Mandlebe has implored the Botswana Stock Exchange Limited (BSE) to address the situation where companies delist from the stock market.

Speaking during the BSE monthly Bell Ringing ceremony this week – an event that signifies the opening of the market – Mandlebe noted that in recent years there has been a worrying trend of companies delisting.

“I, therefore, expect the BSE to continue monitoring the situation to ensure that there is a balance between the cost and benefits of listing for companies on the global stock exchange,” persisted the PS.

There are currently 37 companies listed on the BSE.

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However, in 2019, the BSE endured two high-profile losses, with Furnmart delisting in February and Wilderness Safaris taking the exit door five months later.

Mandlebe maintained some areas need further attention to improve the functioning of the stock exchange.

“The issue of low liquidity and limited secondary market trading requires our attention. I appreciate that the BSE has devoted efforts to outreach to improve the awareness and encourage share ownership and trading,” he said, stressing that continued efforts are needed in this area.

The Finance man added market efficiency also needs improving, noting the time taken to settle share transactions is too long.

“I note that the BSE is quite advanced concerning the technology and systems. This is yet another area where there is a need for improvement, and in particular, there is a need for integrated depository that improves both corporate and government bonds.”

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The PS said this will do away with the need for the Bank of Botswana (BoB) to maintain a separate depository for government bonds.

“Furthermore, this integrated depository must be linked to major clearing systems globally to encourage foreign investors to purchase government bonds.”

Meanwhile, despite the advent of Covid-19, the financial sector in Botswana is said to have performed reasonably well as demonstrated by its resilience in these circumstances.

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“The banking sector withstood the Covid-19 shock without experiencing a significant increase in arrears and bad debt, although profits were reduced as provisions were made for potential loan losses,” said Madlebe.

He noted that the BSE was quick to adapt to the new normal in line with its business continuity plan, which ensured critical functions like trading, clearing, and settlements were done remotely whenever the team cannot work from the office.

The PS stressed that the government is committed to the development of the financial sector in general and the BSE in particular.

“This is demonstrated by the continuous review of relevant pieces of legislation to promote the stock exchange as well as the provision of tax incentives to encourage companies to go public and investors to buy listed shares on the stock exchange.”

These incentives include: no payment of tax on capital gains provided the stock or share has been held for more than a year.

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