Overview
The Botswana Stock Exchange is a small but thriving exchange located in Gaborone, Botswana. The Botswana share market was established in 1989 and became the Botswana Stock Exchange in 1995. It is governed by the Botswana Stock Exchange Act. The Exchange has a small, stable listing. All listings are included in the only index, the Botswana Share Market Index, which is weighted according to the volume of shares in issue and the current bid price. As well as equities, BDC bond and Investec Floating Rate Note are traded. Private investors are estimated to account for under 10% of the total market capitalisation.
The licensing authority for brokers in Botswana is the Ministry of Finance. Membership may be corporate or individual.
Trading Conditions and Regulations Regulations
- Trading days and times:
Monday – Thursday, 09:00 to 16:00
Friday 09:00 – 12:00Trading occurs by the open out-cry system. Clearing occurs transaction by transaction. - Fees, commissions and taxes:
- Dealing costs are a percentage of total considerations on the scale:
- P0 – P50,000=2%
- P50,001 – P100,000=1,5%
- P100,000 and over=1%
- Stock exchange handling fees: P15 per bought note and P10 per sold note
- A 15% withholding tax on dividends is levied
- There is no capital gains tax
- Dealing costs are a percentage of total considerations on the scale:
- Settlement: Due after Trade + 5 days for both local and overseas clients.
- Foreign investment and foreign ownership regulations:
- No one foreigner may own more than 10% of the issued capital of a publicly quoted company, and foreign ownership of the free stock of a local company trading on the Exchange may not exceed 55%.
- Repatriation of funds is allowed up to P100m immediately. Amounts exceeding P100m may be required to be repatriated over a specified period.
Performance
During 1997, the Botswana Stock Exchange saw increased investor interest arising from positive economic developments such as the 1997 national budget, cheap share prices and forecasts of average corporate earnings growth of 20%. With a US$ capital return of over 90%, it was one of the best performing stock exchanges in the world that year.
Although the returns were not quite as spectacular as the previous year, 1998 was also a good year for the Exchange, as it achieved US$ capital returns of just under 15%.
History
The origins of the Botswana Stock Exchange can be found in the Botswana Development Corporations (BDC) need for a vehicle to sell its investments in 1989.
Between 1989 and 1995 the listing rules, member rules and all general requirements were applied, with assistance from the Zimbabwe Stock Exchange, in the share market.
At that time, Botswana did not have an Act so the Exchange had no legal status. An interim Stock Exchange committee comprising two stockbroking members and three members appointed by the Ministry of Finance was established. The Exchange became a legal entity on November 1 1995, after parliament passed the Botswana Stock Exchange Act in August 1994.
In 1996, the Exchange prepared feasibility studies for its plans for the establishment of an independent Stock Exchange, and the Bank of Botswana approved dual listings.
