Botswana and Zimbabwe typify Africa’s diverse capital market challenges

Reported today on City AM

For the full article visit: https://www.cityam.com/botswan....a-and-zimbabwe-typif

CFA Institute has examined Africa's 10 largest capital markets in a major report compiled by Heidi Raubenheimer, CFA, our senior director for journal publications. Here we highlight key developments in Botswana and Zimbabwe.Botswana: mining-dominated exchange seeking to innovateBotswana is one of the fastest-growing economies in the world. But the Botswana Stock Exchange (BSE) has just 35 equity listings and 49 bond listings. Of these, the vast majority are issued by mining companies.The debt market is shallow, with government bonds accounting for 65% of bond listings and more than 90% of trading. Exchange activity may be low, but future prospects are improved by innovative policies. The BSE has tried to boost listings and trading by demanding a higher free float for listings, introducing market making and promoting cross-listings with other southern African countries. In 2019, the exchange launched a board focused on small and medium enterprises (SMEs). The BSE has also launched education initiatives to improve investment knowledge. As a result, at the end of 2018, the exchange had 90,000 registered investor accounts compared with just 20,000 in 2013.There is also an energetic attitude toward pensions, with retirement funds allowed to invest up to 70% offshore and funds starting to make allocations to offshore private firms. In the near future, the BSE is planning to launch depository receipts, which will broaden investor exposure to international securities.Meanwhile, the bond market is moving toward centralisation of trading, clearing, and settlement of trades, which should unlock capacity, increase efficiency, and align with IOSCO's Principles for Financial Market Infrastructures, thereby improving the attractiveness of the bond market to international investors.Zim