The CEO of the Botswana Stock Exchange (BSE), Mr. Aobakwe Aupa Monyatsi, has proposed an alternative strategy to stimulate economic growth by helping local authorities access bond markets, particularly during a time when the central government is experiencing liquidity constraints.
Speaking during a courtesy call on the Minister of Local Government and Traditional Affairs this morning, Mr. Monyatsi highlighted the country’s current financial challenges specifically, the central government’s cash and liquidity issues that are hampering infrastructure development and compromising service delivery. He emphasized that councils, as independent entities, have an opportunity to accelerate development by leveraging their own balance sheets, thereby reducing the fiscal burden on the central government.
Mr. Monyatsi explained that financing through bonds would enable investors to lend money to councils via the public market, facilitated by the BSE. These bonds would carry a fixed interest rate, a semi-annual repayment schedule, and principal repayment at maturity. He noted that such bonds could form a unique asset class attractive to investors, particularly when aligned with long-term infrastructure projects such as roads and buildings. The projects will then generate revenue streams that can support loan repayment, enhancing their appeal and reducing borrowing costs.
He further stressed that the proposed Municipal Bond Programme has the potential to transform the country’s economy by providing councils with fiscal autonomy, allowing them to fund development independently of the central government. He outlined that a subsidiary investment company would be established, owned by the council and governed by a board acting on the council’s behalf.
In response, Minister Ketlhalefile FC Motshegwa and his senior management welcomed the initiative, noting its relevance during these economically challenging times. The Minister acknowledged that when the Ministry’s budget is cut due to financial constraints, it is service delivery and development projects that suffer most. He stated that the initiative aligns well with the Ministry’s ongoing efforts to secure approval for the decentralisation policy, which prioritises fiscal decentralisation.
Minister Motshegwa highlighted the need to enhance the capacity of councils to engage in Public-Private Partnerships (PPPs) as a means of generating funding. He concluded by affirming that it is time for councils to play a more critical role in the country’s development agenda. Councils, he said, must adopt a global mindset and entrepreneurial approach, values reflected in the BSE’s vision and proposal.
