01 Sep 2024

 One of the ways of transforming the economy and growing the private sector is through listing State Owned Enterprises (SOEs) on the stock exchange.

This was said the Botswana Stock Exchange (BSE) acting CEO, Mr Kopano Bolokwe at a panel discussion on the topic Spurring Private Sector Growth Through Privatisation at the recent 17th National Business Council conference, which was held in Francistown.

“The kind of SOEs that Botswana has are large enterprises with sizeable assets, such that their listing on the BSE could not only develop the capital market but could also grow the size and the diversity of the private sector,” he said.

Mr Bolokwe said there was a direct correlation between privatising SOEs by way of listing on the stock exchange, the growth of the size of the market and the growth of the private sector.

He said a research conducted by the World Bank on the Impact of SOE Listings on Capital Market Development in Emerging Markets, showed significant increases in the Stock Exchanges in Egypt, Morocco, Nigeria, Kenya and South Africa as a result of their privatisation programmes.

Mr Bolokwe also said the impact of listing more SOEs on the stock market was that more citizens would become financially included and economically empowered adding that government tends to experience less pressure in terms of having to provide financial support to SOEs and therefore saves money that was deployed into development projects.

He cited the listing of the Botswana Telecommunications Corporation Limited (BTCL) in April 2016 as having contributed to the growth in the size of the BSE and to the growth in the number of investors.

Mr Bolokwe said the BTCL listing was recognised as one of the largest and most historic initial public offerings in Botswana.

He said in July, BTCL released an impressive set of financial results for the full year ending March 31 and announced a total dividend payout of 23 thebe per share, comprising of a special dividend of 15.3 thebe per share and a final dividend of 7.7 thebe per share.

The company paid more than P1 billion in dividends since listing.

Reflecting on this, Mr Bolokwe added that there was an established positive relationship between SOE listing and wealth creation or wealth distribution.

Since listing, he said Batswana received about P500 million as income from BTCL, which was in addition to the returns from price movements as some sold their shares when the share price went above the listing price.

He said government, who owns 51 per cent of BTCL, had also received just over P500 million in income since listing as well as hundreds of millions in income taxes paid.

“This shows that if more and more SOEs are listed on the BSE, government could save a lot of money that is ordinarily paid out as subventions, could receive significant income at the point of listing, and could also receive material incremental income from these entities as they seek to grow their revenues and pay taxes, and also grow their profits and the value of their shares and reward shareholders through dividends,” he said.

Mr Bolokwe pointed out that government was providing a conducive environment for invigorating private sector growth and economic transformation, adding that SOEs must take advantage of this disposition to engage more with government and communicate their vision to transform their entities into thriving public-private owned and listed entities.

He commended government for enabling the transformation of the BTCL from a parastatal to become a public company limited by shares, and for supporting its aspirations to be a listed company on the BSE.

He reassured the participants that it was clear that government understood its role as being a facilitator of economic transformation and of a private sector led economy by being a strategic investor where SOE listing is concerned.

As one of the resolutions in respect of spurring private sector growth through SOEs listings, Mr Bolokwe advised that shareholders must adopt best practices when taking SOEs public, which included promoting competitive neutrality by not imposing ownership restrictions in order to allow for price discovery, a better valuation and vibrant investor participation.

He said this helped to build a track record and gain investor confidence and public support for future SOE privatisations.

He added that any successful SOEs listing had a potential to inspire other SOEs, and even unlisted private companies, that it was possible to undertake a listing on the stock exchange and reap the benefits of listing.

“Botswana has a large and sophisticated domestic institutional investor base who devote expertise and resources to analyse these opportunities and invest in them. The country has no capital controls and has an impressive number of foreign investors. It has large SOE pipeline as seen from the Privatisation Masterplan, with some already having presence in the capital market by way of bonds. All these factors bode well for successful listing of SOEs and capital raising, and must be fully exploited to invigorate economic transformation through the private sector and to spur private sector growth through privatisation,” Mr Bolokwe said. Ends