MASISI’S FULL SPEECH AT ASEA

1.            It is indeed an honour for me to address you this morning at this important Conference being the 23^rd  Annual African Securities Exchanges Association (ASEA), where Africa’s greatest minds in finance  and economic development are gathered to reflect  and share ideas, on how to build stronger African  market economies that facilitate the efficient flow of     capital for economic development. I wish to preface            my remarks by extending a warm welcome to all of             you particularly our visitors from other countries.

2.                  I want to assure you that during your short visit to Botswana, you will realize that we take pride in showcasing our beautiful country which is endowed with mesmerizing flora and fauna. Therefore, I recommend that you find time to go on some game drives and boat cruises, so that you can fully appreciate what Kasane has to offer.

3.                  Similarly, Batswana are well known for their warmth, humility and hospitality and as such, I am confident that your stay in our country will be a remarkable and rewarding experience.

4.                  Distinguished Ladies and Gentlemen, the theme for today’s conference, “Building Resilient African Capital Markets”, is appropriate, because the importance of capital markets to the African and the global economic landscape cannot be over emphasized. Capital markets are a platform to the real economy and the financial economy, which allow the African continent to realize positive outcomes such as improved products and services, as well as the creation of capital-raising opportunities for individuals to improve their lives, and that of fellow citizens.

5.                  Distinguished Ladies and Gentlemen, in most African nations today, legislators have found it fit to create a conducive environment for capital market development through policies that support businesses, as well as the enactment of laws that enable the national stock exchanges to grow and become less dependent on Government support.

6.                  Furthermore, African Governments continue to issue securities directly and indirectly, to support capital formation and institutional development. The Governments’ securities markets in particular, provide an example of the variety of choices available amongst the various support options for market development.

7.                  Among the more important benefits deriving from a well-developed Government securities market, are the setting of benchmark yields for corporate bond markets, enhancing market infrastructure and skills as well as setting regulatory and supervisory standards.

8.                  In this regard, I am grateful to note that African countries have come together to form robust regional capital market platforms, such as the Bourse Rēgionale der Valeurs Mobiliēres (BVRM) which is the Regional Stock Exchange common to the countries of the West African Economic Monetary Union and the Committee on the Southern African Development Community (SADC) Stock Exchange.  These groupings have proven that collaboration leads to rapid capital market development.

9.                  Distinguished Ladies and Gentlemen, it is often stated that our securities market activities remain less developed than banking activities, even though most countries have established the basic legal and regulatory framework required for securities issuance and trading many years ago.

10.              In particular, it is noted that our markets do not yet perform the key functions of providing an alternative to bank funds for debt and equity finance to the private sector which would offer a meaningful secondary market in ownership of securities.  I therefore challenge you as industry players, to note the serious shortcomings and apply yourselves to turn this around.

11.              I am also informed that the usual practice is that, in order to gauge the relative success in developing securities market activities, it is important to assess capitalisation and liquidity ratios in equity markets. Where these remain low in the face of significant advances in macroeconomic stability, the key reasons stated are; lack of consistent development of effective regulation and institutions, inadequate financial disclosure as well as insufficient transparency in trading.

12.              Therefore, during this important conference, we must discuss the main problems and policy challenges in advancing securities market development. Secondly, we should shed more light on the possibilities and options available to promote the development of efficient and transparent markets through the identification of different policy approaches chosen by individual countries on the continent and in our peer markets globally.

13.              Distinguished Ladies and Gentlemen, based on the experience of fellow African countries and research by the African Securities Exchanges Association (ASEA) and the Organisation for Economic Cooperation and Development (OECD), several major problem areas in capital market development have been identified and need further analysis and exchange of views by experts and policymakers in attendance during this Conference. 

14.              These challenges have been identified as follows; the threat to transparency and standards of disclosure in equity markets and minority shareholder rights by the emergence of insider systems; the need for further growth of institutional as well as retail sectors in securities markets in transition economies and their implications on market development. There is also the conflict between trends towards spontaneous market fragmentation and ambitions to centralise trading, amongst others.

15.              I also believe that several of these challenges are in many respects the same for emerging markets as in well-established markets. We are at the same time concerned with the special angle brought about by the transition stage that the African continent is currently experiencing.

16.              Distinguished Ladies and Gentlemen, as developed countries’ populations age, technology is diffused around the world and trade and investment barriers continue to fall.  Therefore, investors in the more advanced markets have few options but to continue to diversify into emerging and frontier markets.

17.              It is therefore critical for us to ensure that efficient systems are put in place to cater for the successful deployment of capital into our African economies, and this includes effective policies, disclosure requirements and laws to attract more capital flows in the future.

18.              Distinguished Ladies and Gentlemen, the Government of Botswana, has come up with action plans and strategies as outlined in our National Development Plan 11, one of which is to create a conducive business environment as well as to support the growth of SMMEs and the Informal Sector.

19.              This is because we believe that wealth creation based on citizen economic empowerment can assist in growing household and business sector incomes, which in turn will enable rapid economic transformation. This strategy will be further enhanced if our capital markets are able to facilitate capital raising for SMMEs across different sectors and serve as an efficient platform for investment by households for wealth creation.

20.              Indeed African securities exchanges continue to prioritise the promotion of entrepreneurship development and inclusion of SMMES into the mainstream economy by formulating SMME-focused listing platforms and a conducive regulatory framework for this purpose.

21.  I am therefore reliably informed that a study      undertaken by the ASEA SME Facilitation Working    Group in 2018 uncovered that at least fifteen (15)            securities exchanges in Africa have established SME       boards, development growth boards, venture            capital boards and small enterprise segment       boards. This should be encouraged and         commended by all stakeholders.

22.  Distinguished Ladies and Gentlemen, I am       optimistic that this conference will offer an in depth       analysis of African capital market development        challenges and bottlenecks, as well as provide       practical solutions to the different issues prevalent             in our markets today.

23.  I am also confident that ASEA, which I am           informed, has twenty five (25) members, will            continue to be a key collaborative entity that             provides insights and impactful initiatives to its       member exchanges.

24.              In concluding my remarks, I wish you to be internationally competitive so as to raise the bar of our contributions to the development of capital markets on our continent.  I therefore wish you some fruitful and successful deliberations as well as a pleasant and memorable stay in Botswana.

25.              Distinguished Ladies and Gentlemen, it is now my singular honour to declare the 23^rd African Securities Exchanges Association Conference, officially open. I thank you for your attention.

PULA!