Stock exchange goes from strength to strength: Botswana's national bourse has an expanding role and its turnover almost doubled

THE BOTSWANA STOCK Exchange is the national bourse given the responsibility to operate and regulate the equities and fixed interest securities market. The Botswana Share Market (BSM) initially came into existence in June 1989. At the time there was no formal stock exchange in Botswana, and BSM traded as an informal market, although Stockbrokers Botswana Ltd, which at the time was the only stock broking business in Botswana, acted like a stock exchange. Today there are a total of three registered brokers; Stockbrokers Botswana Ltd, Motswedi Securities and Capital Securities.

In September 1994 the legislation to transform the BSM into a full stock exchange was passed by parliament paving the way for the establishment of the Botswana Stock Exchange where trading on the BSE opened in November 1995. In March 1998, Ernst & Young took over full administration of the BSE. With effect from July 2001, a full-time Chief Executive Officer was appointed with the aim of making the BSE completely independent. In April 2003 BSE established its own office and discontinued the secretariatship of Ernst & Young.

The Botswana Stock Exchange was set up as a statutory body through which government, quasi-government and the private sector can raise debt and equity capital. The BSE continues to be pivotal to Botswana's financial system, and in particular the capital market. The BSE plays host to the most pre-eminent companies doing business in Botswana. These companies represent a spectrum of industries from banking and financial services to wholesaling and retailing, tourism and information technology.

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The BSM's success has been due to contained efforts from both the government and the private sector at expanding the market. From the commencement of the informal share market in 1989, the number of listed companies on the domestic sector board has increased from just five at inception to the present 20. In addition, there are now 11 dual-listed companies on the foreign sector board, as well as 25 bonds.

There are currently 20 domestic listed companies and 11 foreign. Companies that wish to raise capital through listing on the exchange can list on either the Main Board or the Venture Capital Board. The Venture Capital Board was established in 2001 to provide a listing opportunity for start up businesses. The Domestic Companies Index comprises all 20 domestic shares traded on the Exchange.

Guide to listing on the BSE

* The BSE domestic equity market is the Main Board.

* The BSE Venture Capital Market is dedicated to start-up ventures and has less stringent requirements.

* The BSE Foreign Equity Market is for foreign entities seeking secondary listing on the BSE.

* The BSE Debt Listing is for the admission of entities seeking quotation of debt securities only.

The securities that are currently traded at the BSE are ordinary shares and bonds (government and corporate. However, in efforts to increase liquidity issues the BSE is in the process of introducing other products such as exchange traded funds.

Benefits of listing

* Raised company profile

* Provides a valuation mechanism for the securities of listed companies

* Citizen Economic Empowerment--one of the options that give Batswana part-ownership in your firm

* Gives the public an opportunity to participate in the overall growth and development of the companies they buy securities of

* Provides a secondary market for listed securities.

New developments at the BSE

During the fourth quarter of 2007 the implementation of the Central Security Depository System (CSD) commenced. The CSD is to automate the clearing and the clearing and settlement function of securities that are required for trading to take place. The present manual system that the BSE uses entails paper share certificates being exchanged for funds when a share transaction takes place. What the CSD does is to automate this process through what is known as 'dematerialising' the securities. What the operation of the CSD will do is to allow investors to open accounts in the CSD to which securities purchased by them are credited and securities sold by them are debited. It operates in the same way a bank account does. This development will have a far-reaching impact on making share trading efficient.

The other notable development that is in the BSE's future plans is the automation of trading which would make the BSE far more visible and accessible than it is now. Automating the BSE will help bring the market closer to the people. For instance, there could be branches of the Exchange outside the Kgale Mews Offices; the market could be on the internet which would make it more accessible to both Batswana and foreign investors.

For more information tel: +267 3180201; Fax: +267 3180175. e-mail: info@bse.co.bw or marketdev@bse.info.bw or visit www.bse.co.bw