Evolve or die – warns BSE CEO

… As 17 companies graduate from Tshipidi Mentorship Programme

Small Medium Enterprises (SMEs) have been warned to consider growth opportunities with the Botswana Stock Exchange (BSE) as failure to do so will result in them collapsing.

BSE Chief Executive Officer, Tshepo Tsheole, said this at the September 2019 BSE Bell Ringing ceremony that also saw 17 local businesses graduate from the exchange’s Tshipidi Mentorship Programme (TMP).

Tsheole said the BSE introduced the programme to groom local companies that could potentially raise capital, improve governance and leverage from increased publicity through the stock market in the short to medium term.

He further outlined that the objective of the TMP is to provide practical training through a comprehensive and interactive programme that covers the key themes necessary to prepare and position a company to list on the BSE.

“Practical training was offered by industry experts (advisors in the listings ecosystem) with regards to key elements of corporatisation, capital structure, financial reporting, commercial law, listing requirements and corporate governance,” he said, highlighting that the programme was facilitated over a four months period during which, the exchange held 2-days engagement every month beginning June 2019, with the last session having taken place in August 2019.

Tsheole said participating companies get practical insights, knowledge and feedback from institutional investors on what to look for and how the company should look like to be ready to invest in IPOs.

Amongst other benefits, the programme also offers increased awareness of the BSE listing requirements by potential issuers as well as applied knowledge of the same, and perhaps most importantly, create an intimate network of advisors and progressive access advisors and CEOs of listed companies.

For the programme attendants to complete their course, some of the requirements are that the company must be registered in their country of incorporation and the founder and CEO or CFO must attend all modules. The company also needs not have operational history and the next cohort of companies will be rolled out next year.

The companies that featured in the 2019 BSE Tshipidi Mentorship Programme were AT & T Monnakgotla Group of Companies, First Capital Bank, Homec – Services, Trading and Distribution (Botswana’s first Verimark Direct Franchisee), Ticano Group – Financial Services, Earth Vitamins, Destiny Car Rentals, Urban Soul Apparel, Cally Clothing, Glam Collections – Manufacturing, Bo-Inter Trading, Energy X Petroleum, Creative Business Solutions, Kelyh Mass, Sareg Building & Civil Construction, Ultimate Hydro Solutions, STOL Petroleum and Zila Investments.

Business Botswana President, Gobusamang Keebine, said the programme taps into the importance of SME development in Botswana and the role that the stock exchange can play in facilitating their growth through equity and debt finance.

He said the introduction of the Opening Bell ceremony back in 2018 will help the BSE’s efforts of increasing awareness about the local capital market and the opportunities that are abundant for both investors and issuers of financial securities.

“Business Botswana supports all initiatives that seek to empower and grow small-medium businesses into regional and international behemoths that they are destined to be,” he stated.

Keebine further said the TMP is in line with his organisation’s philosophy and mission of making Business Botswana the foremost business organisation driving sustainable and inclusive economic development and social transformation of Botswana.

“Such iterations are common in stock exchanges across the world, created with the objective of capacitating small-medium businesses on all aspects of capital raising through listing on a securities exchange,” he added.

He highlighted that to date, the BSE has made strides in trying to develop the market through various ways such as leveraging on technology, expanding the product offering, increasing the number of issuers and investors, accelerating the process of demutualisation which was achieved in August 2018, improving collaboration with strategic partners and streamlining business processes ensuring financial sustainability for the Exchange.

“This milestone not only instils confidence in the market, but also serves to supplement already existing business development programmes,” he said.

Keebine said the modules that were part of the programme including Corporate finance, Corporate governance, and Financial reporting, will increase the level of assurance and professionalism in the local market, resulting in valuable businesses that are efficiently run by qualified and competent boards of directors, “…a direction that African businesses, listed and unlisted need to go towards.”

For his part BSE Board Chairperson, Retired Lieutenant General Tebogo Masire, said the programme was borne from the realisation that SMEs are a critical component of any thriving economy.

“We are encouraged by the resounding response and feedback that we have received from various stakeholders in establishing this Programme that is driven at SME development in Botswana,” he said, adding that SMEs and the private sector contribute towards the promotion of a robust and vibrant Economy through improved productivity, creation of jobs, improvements in infrastructure, increase in household income, development of skilled and semi-skilled workers and adaptation of technology and innovation, among others.

Masire, however, noted that it was important to create a favourable environment that allows growth and expansion for SMEs to realise their full potential as an engine of growth.

“It is the collaborative responsibility of all stakeholders to initiate synergies that can foster such growth and development of SMEs in Botswana,” he advised, noting that SME development has been, in the current economic landscape, constrained by access to finance and these constraints have stifled the growth of potential businesses, thereby dampening the economic diversification and employment creation drive.

“Traditionally, access to financing has been dominated by commercial banks, which are the major suppliers of credit to households and private businesses in Botswana. While much of the focus, appropriately, is on enhancing lending to SMEs, there is growing emphasis on the need to diversify the range of financing options that are available to SMEs, and consequently the potential role of capital markets in SME financing,” he observed, adding that avenues like the stock exchange have not been fully utilised as there remains an opportunity for access to equity market finance, which brought about the formation of the Tshipidi Mentorship Programme.