Financial services sector can help diversify economy-Kedikilwe

MPHO MOKWAPE
Correspondent | Monday March 18, 2013 00:00

 

Speaking during the official launch of the latest entrant in the fund management industry in the country, Afena Capital Botswana, Kedikilwe said the development of the financial services sector has been one of the key strategic objectives of the government in driving the economic growth and sustaining it for long-term benefits.

He explained that the fund management industry as one of the financial service industries has seen a substantial growth in recent years that has been in the form of both a number of markets participants and the value of funds managed by the industry. As a result, the Non-banking Financial Institutions Authority (NBFIRA) reported a growth as by the end of March 2012, they had registered 13 assets managers and had licensed six management companies dealing with collective investment Undertakings.

He said the fund management growth, also coincided with the growth experienced in long term savings especially the Pension Fund assets, as it equated to 37% of the GDP after the value of Retirement Funds increased from 9.2 billion to 46.7 billion between 2002 and 2012 despite being considered a low growth.

One area also identified to have seen substantial growth was the domestic capital market, which was particularly in the form of domestic bond markets where the government became an active issuer in 2004 and in turn worked as a catalyst in its development.

However, Kedikilwe said there are still challenges faced by the capital markets, particularly around improving the liquidity in secondary markets hence the privatisation of various parastatal entities, and the prioritisation of private sector-led growth to diversify the economy that may allow opportunities for further deepening of the domestic capital markets.  Furthermore, Kedikilwe emphasised the need to harness the opportunity to drive economic growth through long-term savings given its significant size to become a more active source of capital.

'In this essence, it is critical to remember that long term savings that are managed by the fund management industry in Botswana are funds that ultimately belong to hundreds of thousands of citizens', stressed Kedikilwe.

Meanwhile, Kedikilwe acknowledged the establishment of NBFIRA saying it plays a critical role in safeguarding the stability, fairness and efficiency of the non-bank sector and stressed that the regulator should remain effective in the execution of its role.

With the future economic development of the country hinging on the private sector becoming the engine of economic growth, Kedikilwe lamented that the management fund also has a critical role to play in making capital allocation decisions.

He further said the availability of the quality and relevant skills among Batswana are important drivers of private sector led growth hence the developed number of skills development programmes for the youth.

'The fund management industry is an intellectual capital based industry and the development of intellectual capital is important, with the continued growth in number of participants for the significant training it would need to develop their intellectual capacity, which is needed to sustain the industry,' Kedikilwe said. Giving the company background, the CEO and Chairman, Tebogo Naledi said they intend to create a financial legacy that will work to Batswana's advantage. He also said they are looking forward to making a substantial contribution in the development of the economy of Botswana as they have been doing for the past seven years. Naledi added that the development of the local fund management industry is critical as most Batswana rely on it for sustainability hence the need to fully focus on its mandate vital to maintaining the company's business integrity.