Riscura has been benchmarking across borders
An esteemed investment firm has revealed its extensive efforts over the past 12 months dedicated to exploring the implementation of alternative investments within the Botswana market. Riscura, a renowned player in the financial sector, shared insights during the Botswana Pensions Society Conference 2024.
Riscura’s CEO Loago Bokole shed light on strategic endeavors in this domain, particularly regarding infrastructure.
He disclosed a comprehensive approach involving benchmarking against counterparts across borders who have successfully executed similar strategies, leveraging insights from both their triumphs and challenges.
Bokole noted the absence of data metrics in Botswana, citing the hypothetical scenario of constructing a toll road without adequate insights into traffic volume, such as the A1 road. “That data is not there.”
A critical aspect of alternative investments in a fledgling market like Botswana revolves around the allocation of risks among stakeholders. First, Bokole noted the primary risk concerning ownership of assets as equity holders, emphasising the importance of assessing their financial capacity to inject capital into projects as required and the risk appetite.
The second point he highlighted for his audience is the establishment of a secondary market. This entails exploring avenues from a debt perspective, thereby providing financing for infrastructure projects.
Another significant point he mentioned pertains to the pipeline of projects. Naturally, investors will begin by considering the National Development Goals (NDP). Bokole stressed the crucial step of appreciating which among these projects hold commercial viability.
“Remember you are not just giving money for building a road,” Bokole said explaining that investors want to get their money back. “Cash needs to come out of it.”
While there are roads earmarked for the transitional NDP, there is a specific focus on government infrastructure development, including the construction of offices, high courts, and housing for government employees. But Bokole argued that housing is subsidised for government employees. “So is that risk actually worth it?”
Another pivotal aspect is the complexity of the country’s infrastructure, where commercial viability often hinges on its integration with robust trade routes and cross-border movement of goods and services. Against this background, Bokole said there is engagement around specifically outlining what portion of a mandate that is deemed local infrastructure can be invested outside in neighbouring countries like Namibia while still fulfilling the requirements of the funds being considered local.
“We want to make sure that as we go into some of these projects we don’t face the risk of having regulatory challenges of the regulators coming back to you to say, that’s not a local asset.”
Bokole’s remarks highlight the intricacies of investing in infrastructure within Botswana.
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