04 Mar 2019

Research is the only way to build a portfolio of quality businesses in Botswana.

Portfolio manager at Investec Asset Management, Dr Pako Thupayagale, said this when presenting about investment ethics in a concentrated and illiquid market: the case of Botswana listed equities at the just ended Botswana Pensions Society conference in Maun.

He stressed the need for institutions to have sound ethics, stating that the Botswana equity market was unique because it was small and illiquid.

He also indicated that institutional strength was a key pillar of companies’ investment process.

Dr Thupayagale said good governance was achieved by proper risk and compliance management.

Compliance showed adherence to specific requirements in laws, regulations, contracts, strategies and policies.

He stated that the risks that governance and compliance were designed to protect against were often interdependent. 

Furthermore, he pointed out that sound and robust organisational ethics were key to protecting shareholder value, adding that it was particularly important in Botswana, where the equity market was concentrated requiring asset managers to actively engage with the management of investee companies. 

In addition, he said organisations should have competent and independent boards, that must have regard to long-term stakeholder issues when making decisions. 

Dr Thupayagale said they also had a responsibility to shape and oversee their company’s culture.

“We believe companies with a strong ethical culture should be less vulnerable to shock and more likely to thrive in the long term,” he added.

He also talked about the importance of environmental, social and governance (ESG), as an integral part of the investment analysis and decision making process and not an addendum to the companies’ process.

ESG sought to understand corporate strategy, capital allocation and framework for achieving long-term growth. 

Furthermore, Dr Thupayagale said as long-term investors, they aimed at understanding the companies in which they invested.

Dr Thupayagale stated that an effective system of governance reduced forecast risk.

A diverse, independent and skilled board, he said, was the material element of the system of governance.

Head of compliance from Stanbic Bank, Ms Shathani Molefe, stressed the need for companies to ensure compliance and build a strong culture in the workplace so that everyone would know what they needed to do to ensure good conduct and a good compliance culture.

Companies were urged to introspect and state what to do differently to ensure a good culture of ethics and compliance prevail in their organisations.

Meanwhile, the seminar brought together professionals from various disciplines to discuss how best they could promote the highest standards of ethics, education and professional excellence for the ultimate benefit of society.  ENDS