New BSE board to give SMMEs a boost
Isaac Pinielo | Wednesday March 15, 2017 15:59
BSE chief executive officer, Thapelo Tsheole unveiled the new board known as Tshipidi, at Thursday’s Second Listing and Investment conference, teasing SMMEs with few details about the upcoming launch.
“The Tshipidi Board for SMMEs is due soon, which will have lower entry thresholds for companies, such as the minimum number of investors required,” he told the conference.
“We are working on the listing rules because one of the things that must be understood is that when you bring these into the public platform, you are bringing risk. People will want to put their money into them and you must handle that.”
According to research, many SMMEs shy away from equity listings due to fears around the costs of listing, restrictive listing requirements, tough compliance rules once listed, as well as SMMEs reluctance to cede control of their entities and the generally low financial literacy.
BSE market development manager, Thapelo Moribame told Mmegi Business that the new board would be launched sometime this year.
“The drafting of listing rules will be followed by extensive consultations. The new board will address the challenge of access to capital that SMMEs face,” she said.
Tshipidi will cater for the enterprises that are not able to meet the requirements of the existing boards by providing less onerous listing rules that are appropriate for their stage of development, while at the same time maximising market efficiency, facilitating risk control and developing the capital market.
Currently, the BSE has two platforms, the Main Board, and the Venture Capital Board that have been catering for enterprises that list on the exchange, with the Venture Capital board having less stringent requirements to those of the main board.
Moribame indicated that the BSE has the responsibility to develop the market and that they continually review the current infrastructure and its suitability to act as a catalyst for growth, particularly that of SMMEs given that Botswana is predominantly an SMME dominant economy.
“The BSE has a multi-tier market that is designed for enterprises that fall within different stages of growth, and of different sizes and risk profiles,” she said.
She added that by launching the Tshipidi SMME Board, the bourse seeks to satisfy the capital-raising needs of SMMEs by providing a direct financing platform for enterprises with a growth potential.
At the listings conference, news of the forthcoming board was met with delight by SMMEs who described it as a welcome development.
“SMMEs are looking forward to the establishment of Tshipidi Board or a similar junior platform where requirements around capital, profit history and track record would be lower than those currently existing on the Main Board and the Venture Capital Board,” Phakalane Estates chairman, David Magang said.
Staci Warden, executive director of the US-based Milken Institute Center for Financial Markets said SMME boards around the world offer special features and benefits that include lower listing thresholds, reduced fees, hand holding, and sometimes tax advantages.
“SMME boards offer micro benefits such as access to finance, lower cost of funding, diversification of investor base, reputation gains, improvement of corporate governance and reporting, tax benefits and other inducements, as well as exit opportunities for investors,” she said.
In addition, Warden said, SMME boards also have macro benefits that enable private markets for SMMEs and incentivise longer-term capital commitment of savers.
Also at the conference, Vice President Mokgweetsi Masisi noted that by increasing the number of listings, the liquidity of the markets will be enhanced, thus attracting more participants to the capital markets.
“This will ultimately assist the Botswana Stock Exchange to become a world class securities exchange, which will in turn attract foreign direct investment (FDI),” he said.