BSE handholds GCC towards historic municipal bond B2
Mbongeni Mguni | Monday August 18, 2025 06:00
For years, the BSE and its partners in the Botswana Bond Market Association advocated for the use of municipal bonds as a viable infrastructure development financing mechanism. Municipal bonds, as used all over the world, are debt instruments that local authorities issue to secure financing for infrastructure and related developments.
Corporates and citizens invest in the bonds thus lending to the local authorities and in many cases, their interest return is made non-taxable or given other types of preferential exemptions. Local authorities tie their bonds with either their revenue or the returns from the projects being developed.
At present, other than conventional bank loans and equity arrangements, the common alternative finance products issued in the market are government and corporate bonds.
“We live in a world where the needs of our cities are growing rapidly—from modern infrastructure, sanitation, waste management, housing, and sustainable transport systems to digital and smart city capabilities,” said Local Government and Traditional Affairs minister, Ketlhalefile Motshegwa at the signing of a Memorandum of Understanding between BSE and GCC on Tuesday. “However, traditional financing channels have proven insufficient to meet the full scale of these requirements. “The time has come to tap into the vast potential of the capital markets, and this partnership with the BSE offers precisely that avenue.”
He pledged the ministry’s full support to the initiative, including providing the regulatory backing and policy alignment necessary for the planned bonds and any other innovative financing instruments.
“We also stand ready to extend this model to other cities and towns once we have gained the necessary lessons from this pilot initiative,” Motshegwa said.
BSE CEO, Aupa Monyatsi, said the agreement with the GCC for the development of a municipal bond underscored the utilisation of capital markets to support inclusive transformative development, something the exchange has been advocating for.
Monyatsi said the municipal bond provided the opportunity for the “democratisation of wealth” by allowing citizens to participate in both funding the infrastructure development around them and earning returns from their investment.
“One of the key pillars of our new strategy is to be inclusive and to democratise wealth. “So as we think about this municipal bond, at the centre of it is the participation of the retail investor in helping transform the economic landscape of our municipalities,” he said.
Monyatsi added that the BSE has a singular opportunity to support the country economic ambitions in line with the Botswana Economic Transformative Programme being the gatekeeper of private capital to help fund governmental transformative projects.
“We stand not just as a platform, but as a trusted, independent, and well-regulated institution that is globally recognised, that can mobilise both domestic and international capital, and provide the necessary assurance and cadences that are needed by both domestic and international capital,” he said.
Through the agreement, the BSE will provide training and technical support to the GCC in pursuit of the floating of the municipal bond.
Present at the signing ceremony were members of pension funds as well as asset managers who will be key to the municipal bond’s success. Market watchers at the MoU signing told BusinessWeek they were eager for more details on how the GCC would anchor the bond, with talks due on pricing, risk, returns, and the projects to be funded.
Analysts are also keen to see what role government will play, if any, in underwriting or guaranteeing the bond.