Wanetsha Mosinyi
25 March 2008
The Governor of Bank of Botswana, Linah Mohohlo, came out with guns blazing aimed at local primary dealers who do not participate in the development of the capital market.
"I am very disappointed that there are still primary dealers who do not participate in the primary capital market. This means that some of our counterparts are not delivering their bargain because as primary dealers, we have an obligation to develop a fully-fledged capital market," says Mohohlo. She was speaking last week Tuesday at the BoB Auditorium during a ceremony marking the launch of government bonds issue. Government has issued up to P5 billion worth of bonds that will mature at different times. The issue of Treasury Bills and two new bonds comes after the maturity of BW002, issued in 2003.
"We should be seen to want to partake in anything that develops the capital market. There has to come a time that the word in-liquidity does not exist in our market," Mohohlo says. The Governor also castigated the primary dealers for their reluctance to part with money to train their local employees to know more about the capital market.
"I don't understand where this reluctance stems from?" she wondered.
"Our people should not only contribute to the bottom line of a company. I want to encourage all of us to make sure that we impart skills because there is no point in developing the capital market without people with skills to run the market," she pointed out. Mohohlo acknowledged the participation of fund managers in the secondary market adding that without their participation "we will not see the light of the day".
She, however, also encouraged the fund managers and institutional investors to part with their money for the training of Batswana.
"We have some of the brightest minds in the world and they are eager to learn, so let's train them," urged Mohohlo. She said Botswana needed to have an independent and thriving primary and secondary capital market. It can only be possible, she said, if the private sector collectively gets involved in the development of the market.
"I do commend the Minister of Finance for his efforts in developing the capital market but we also need to take a part because we can not always rely on the minister or government alone to develop the primary market," Mohohlo pleaded. Finance minister, Baledzi Gaolathe, also said for the capital market to develop, all stakeholders must play their role effectively.
He urged all stakeholders especially the private sector, and in particular, the banks, to fully play their part. "As primary dealers, banks are in a privileged position. The flipside of that privileged position are obligations that primary dealers must discharge. I am reliably informed that the banks are prepared and ready to fullfil their obligations." Gaolathe said the first bonds that Government issued in 2003 were meant to meet the demand of long-term investors and also establish a sovereign yield curve.
He said domestic investors welcomed the initiative. However, because of the relatively small supply of bonds that were issued in relation to the demand, most investors bought and held them to maturity. The minister said a vibrant secondary market is important for providing current prices of assets to build a durable yield curve.
"It is also the view of government that the financial sector development has reached a stage where the domestic capital market must be firmly established," Gaolathe said. Bank of Botswana acted as an advisor and issuing agent for these issues and further advice was provided by Stanbic Bank Botswana and its parent company Standard Bank of South Africa.
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