The International Monetary Fund (IMF) estimates that the global economic recovery is continuing despite the surge in the pandemic, although the momentum has slowed down, according to the IMF’s World Economic Outlook (WEO) published in October 2021. The global economy is projected to grow by 5.9% in 2021 with Advanced Economies growing by 5.2%. Emerging Markets and Developing Economies are expected to expand by 6.4% while output in Sub-Saharan Africa is projected to grow by 3.7% in 2021. Risks to these growth projections include the enormous disparities in vaccines access as well as the emergence of more transmissible and deadly variants of COVID-19, which have proven to inspire episodes of volatility in global financial markets.
Botswana is anticipated to be one of the leading African economies in terms of economic output in 2021. The recovery in the economy has been observed across majority of industries over the year mainly due to the efforts to reopen business and relax COVID-19 regulation, amidst the rollout of vaccination, according to Statistics Botswana. Third quarter real gross domestic product (GDP) increased by 8.4% compared to a contraction of 4.5% in the corresponding quarter of 2020. The Ministry of Finance and Economic Development (MFED) projects Botswana’s economy to grow by 9.7% in 2021, from a contraction of 8.5% in 2020, driven mainly by a healthy rebound in diamonds sales.
Global equities performance has been positive, fuelled by the vaccine-powered global economic recovery over the year. Several developed markets and African markets indices closed the year with double digit growth. The effects of the global recovery are observable on the domestic equity market, judging from a stronger pace of growth in BSE indices. The Domestic Company Total Return Index (DCTRI) has appreciated by 11.1% while the Domestic Company Index (DCI) has gone up by 1.9%.
It is pleasing to note that the market performance has improved significantly across the bourse; the number of listed instruments has increased to 80 from 79 in 2020, with a 100% increase in the number of ETFs; total turnover has gone up to P4.5 Bn from P3.6 Bn in 2020; average daily turnover across all instruments has gone up by 25%, from P14.5 Mn to P18.1 Mn. The domestic equity market in particular has experienced remarkable recovery with the average daily turnover rising almost three fold from P2.8 Mn a day to P7.3 Mn a day. This was mainly attributable to the record single day turnover of P1.1Bn due to the acquisition of BancABC Botswana Limited by Access Bank Limited.
The year 2021 can be credited with a lot of positives, even amid the challenges posed by COVID-19. The BSE never had to close the market at any point in time since the pandemic began, thus did not experience any disruption in market operations and did not encounter any adverse issues of compliance on account of this pandemic. The BSE managed to set new records two of which are the highest single day turnover and the two ETFs being listed in one day as well as a total of three ETFs being listed in any given year. These are new milestones in the history of the BSE and we intend to build on these to improve the status of the market. During the year, we commenced the formulation of a new 5-year strategic plan (2022-2026) that seeks to make the BSE a world class securities exchange, particularly in the frontier markets space. The strategy seeks to explore new ways of promoting financial self-sufficiency, new strategies to improve liquidity, policy advocacy, and build a high performance organisation, among others.
The next sections of this report provide an overview of the relative performance of the market in 2021.
