“There is one thing that is not clear about the whole deal. One would like to know whether it was a one off thing or the beginning of a long term trend,” Martin Makgatlhe the chief executive of Motswedi Securities said.
“The most worrying thing is that government is selling an investment which is performing quite well while there are some other means of raising money like the privatisation process. Privatisation could dove-tail well into the fund raising exercise,” he added. Government off-loaded half of its shareholding in Anglo-America on Monday in bid to raise cash for the development budget following the announcement of a possible budget deficit last month.
The move to sell the Debswana shares in Anglo-American through the US investment bank, Merrill Lynch raised P766 million on the London Stock Exchange (LSE). The sale comes less than five years after Debswana were chosen as the preferred partners during the unbundling of a complex shareholding between De Beers and Anglo-American.
Analysts said that Anglo-American and De Beers through Debswana —- the two major global mining companies — are Botswana’s main cash cows. They account for over 33 percent of the Gross Domestic Product (GDP) and over 50 percent of government revenue. Analysts say the Anglo-American shares should not have been sacrificed.
“From the look of things it is like government is faced with a situation where expenditure is going out of control while the revenues are shrinking. The focus and the strategy should change (towards privatisation) if government needs some money,” Makgatlhe said.
He asserted that the execution of the deal did reflect badly on government’s commitment to its exalted policy of citizen empowerment. This is because the government chose a foreign firm to handle the deal instead of local ones. “The deal goes counter to government pronouncement on empowerment. Government is the biggest employer and should have involved the local brokers. That would have helped the BSE with trading volumes, financially and helped in exposing the local brokers to overseas markets,” Makgatlhe charged.
The chief executive of Stockbrokers Botswana, Wayne Osterberg concurred adding that Anglo-American with a primary listing on LSE and secondary listings on Johannesburg Stock Exchange(JSE) and BSE would have given the local bourse a boost if the transaction was executed locally.
“The local brokers have the capacity and the relations with the international markets and if the deal could have been executed here, it would have given the BSE a boost on the international markets,” Osterberg said.
“It is a pity that it did not happen that way and I would think the local brokers are disappointed,” he added.
