Calls for collaboration among stakeholders
Bond market dominated by government, asset managers
In a bid to broaden the participation base in the bond market, Stanbic Bank Botswana has called for enhanced inclusivity, urging the involvement of retail investors.
A bond is an investment product which an investor can earn interest income through a loan agreement and ultimately get their money back at the end of the loan. Generally, bonds are considered low-risk investments. But investing in bonds has risks such as investment losses arising from the company’s failure to pay interest or repay the principal amount borrowed.
Currently, the bond market landscape is largely dominated by government entities and assets managed by fund managers.
The Botswana Stock Exchange (BSE) Market report for the full year 2023 revealed a composition of 7 Government Bonds, 86 Corporate Bonds, 28 Commercial Papers, and 1 Sustainable Bond. The cumulative market capitalisation stood at approximately P28.5 Billion.
Lesego Osman, the Head of Business and Commercial Banking at Stanbic, expressed the need for a more inclusive approach during a recent panel discussion on ‘public markets versus private debt markets’ held at the Bond Market Conference 2023. Osman emphasised the importance of extending the accessibility of bond market programs to the average Motswana, fostering a more comprehensive participation framework.
During the discussion, Osman remarked, “It would be really great to see us being able to extend this product set to the average man on the street to be able to have a more inclusive program.” He highlighted the common perception of the stock exchange as an exclusive domain for corporates or individuals with substantial wealth, stressing that it is a financial tool accessible to every Motswana.
Osman acknowledged the challenges associated with transforming this vision into reality, stating, “Other markets have created bonds that are specifically targeted at retail investors. Sometimes the how proves to be the challenge.” However, he called for collaboration among stakeholders, emphasising the collective responsibility of the Bond Market Association, banks, and various issuing entities to ensure the inclusivity of all individuals in this financial journey.
Stanbic, through Osman’s advocacy, is actively encouraging a more inclusive bond market environment, aiming to dismantle barriers and enable broader participation by retail investors in Botswana.
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