23 Jul 2024

The Botswana Stock Exchange (BSE) has been at the forefront of cultivating a capital market that promote sustainable finance and sustainable economic development. 

The journey dates back to 2016, when the BSE became a Partner Exchange of the United Nations-backed Sustainable Stock Exchanges Initiative (SSEI) This commitment underscores the BSE’s dedication to enhancing sustainable finance and promoting sustainability performance within the local capital markets.

In an interview yesterday, Mr Kopano Bolokwe, the acting Chief Executive Officer of BSE, highlighted on the  journey. He noted that the BSE stood as the third stock exchange in Africa to embark on this path, alongside 134 other stock exchanges globally as Partner Exchanges of the Sustainable Stock Exchanges Initiative.

Mr Bolokwe emphasised the BSE’s pivotal role in advancing sustainable finance within Botswana, aligning with the country’s national priorities outlined in Vision 2036. “Our priority lies in supporting the government in achieving prosperity for all, particularly within the realms of Vision 2036,” he stated. The pillars of Vision 2036, encompassing sustainable economic development, human and social development, sustainable environment, and governance, reflect the aspirations that can be realised through the establishment of appropriate financial mechanisms and market standards. 

As the BSE spearheads these efforts, the journey has facilitated an elevation in sustainability standards across the board, notably in ESG (Environment, Social, and Governance) practices.

Through its commitment to sustainable finance and market excellence, the Botswana Stock Exchange continues to champion sustainable economic growth and societal wellbeing, embodying a beacon of progress and responsible financial stewardship in the region.

In 2023, he said the BSE commissioned the listings requirements for sustainable bonds, which comprised green bonds, social  bonds, sustainability bonds and sustainability-linked bonds. 

Mr Bolokwe said as an example, green bonds were used to raise capital on the BSE to finance environmentally friendly projects and projects that support climate change adaptation and mitigation such as renewable energy and clean transportation. 

He said social bonds were used to raise capital on the BSE to finance projects that support social development and these could include affordable housing, and financing of businesses run by women. 

“As you would see from how the proceeds from these bonds are deployed, they directly support the pillars of Vision 2036. 

Green bonds, for example, contribute to the pillar of sustainable environment, and social bonds contribute to the pillar of social development. 

But broadly, they both contribute to the pillar of sustainable economic development because the economy would thrive and when we are able to adapt to, and mitigate, climate risk and also promote social stability, and equitable access to opportunities by the members of society,” Bolokwe added. 

He said the BSE has since developed the sustainability and ESG market standards, called the BSE Sustainability Disclosure Guidance. 

The standards has become very instrumental too in supporting the Vision 2036, across the environmental, social and governance spectrum. 

These standards are used by listed companies to communicate their ESG information and sustainability practices to investors to stakeholders, who were the owners of capital, and were not only looking for financial returns, but were also looking for impact, which contributes to long-term value creation for shareholders. 

“Our Sustainability Disclosure Guidance has been developed taking into account the prevailing and forward looking ESG Disclosure Standards around the globe, particularly those from the Global Reporting Initiative (GRI) and the International Financial Reporting Standards (IFRS), which are the leading and global market standard setters,” he said. 

Notably, Mr Bolokwe said ESG was a license to operate, and whoever was left behind in operating their business in the best interest of all stakeholders, which was called stakeholder capitalism, would find it difficult to operate as a concern, simply because the cost of capital was expensive for those who are left behind in the context of ESG. 

In parallel to introducing the sustainability segment and market standards at the BSE, the BSE also introduced fee incentives for listing sustainable bonds which was a 25 per cent discount in comparison to ordinary bonds, he said. 

Mr Bolokwe said this noble approach helped to raise the competitiveness of Botswana’s financial sector in the Absa Africa Financial Markets Index of 2023. 

In this index, Botswana was upgraded from number eight in 2022 to number six in 2023 due to the ESG fee incentives, out of 28 African countries surveyed. 

“The local ecosystem sees these innovative developments and opportunities and is taking action. 

In December 2023, Absa became the first listed company to list a sustainable bond on the BSE and has raised a total of P80 million so far. 

The proceeds have created 280 jobs, and impacted 1 240 lives through affordable housing in one of the innovative projects in the outskirts of Gaborone. 

This is what we mean when we say our priority and reason for existence as the BSE is to support livelihoods and sustainable economic development,” Mr Bolokwe highlighted. 

Mr Bolokwe encouraged all companies in Botswana to leverage the BSE for different types of capital including commercial paper, which was used to raise short-term finance and working capital. 

He also called on to listed companies to explore corporate actions such as rights issues to reduce and optimise the cost of raising capital. 

Further, he emphasised that through capital raising on the BSE, government and private sector were able to create jobs, impact livelihoods, and build the necessary infrastructure to support Botswana’s growth and economic development.  Ends