BSE CEO launching 2022- 2026 strategic plan
In the latter years of our 2017- 2021 strategic plan, financial markets were characterised by some level of volatility, uncertainty and elevated risk aversion mainly arising from the COVID- 19 pandemic and the pandemic induced macro- economic slowdown. At it is, during the times that stock exchanges must demonstrate resilience and facilitate capital formation, capital flow and capital allocation. In a crisis, the world needs finance more than ever and investors need to price assets and manage risk appropriately. Notably, it is our strategic preparedness and business continuity management plans that enabled us to sail through the pandemic without any disruption to the operations of the market, and with little impact on the strategic plan.
The 2017- 2021 strategic plan was a transformational strategy in many ways. Leveraging the spirit of the eleventh National Development Plan ( NDP 11), the BSE implemented initiatives to support entrepreneurship development, private sector growth, citizen economic empowerment, broader financial inclusion and digital and technological transformation while creating an enabling environment for both private and public sectors to thrive. A lot of opportunities have been tapped, and a lot of structural issues continued to be reformed and resolved. Inarguably, these developments provided essential support to the macro economy at the time of rolling out the Economic Recovery and Transformational Plan ( ERTP) which continues to impact the strategy beyond 2021. In overall, the BSE achieved a performance score of 91.0percent following an independent review of the 2017- 2021 strategic plan. It is worth noting that this did not come without challenges. The main challenges emanated from the systematic downward spiral in liquidity and listings, which is being experienced both domestically and in international markets. For example, PwC’s Global IPO Watch of 2019 indicated that the number of new listings in global equity markets went down by 31.7percent in 2019, with emphasis that IPOs have declined year- on- year since 2015. In its Markets Highlights for the first half of 2020, the World Federation of Exchanges ( WFE) indicated that IPOs were down by 36.5percent over that period, with a further decrease of 6.2percent in the year 2021 as a whole. In Africa, PwCs research for the past 10 years indicates that it has been very difficult to attract new listings in African markets, and this has had an adverse impact on overall liquidity in stock markets. Their research shows that the highest number of IPOs achieved in Africa ( excluding South Africa) between 2011 and 2020 was 9 companies. Over this period, the BSE garnered 8 IPOs. There are notable achievements in attracting new cross- border listings and international issuances. This is a demonstration of the international issuer’s confidence in the operations of our market and it is a comparative advantage that we will continue to explore to increase the number of various instruments on the BSE.
The overall achievements of the 2017- 2021 strategic plan is an indication that indeed we are becoming a world- class securities exchange. The capital markets ecosystem has materially improved, implying that the relevant stakeholders are indeed pulling their weight. A key highlight has been the conversion of the BSE from being a mutual entity to being a company limited by shares, through a process of demutualisation. This transition has been the major driver in delivering the strategy as it instilled a mind- set of being a commercially- oriented organisation. Notwithstanding, there has been remarkable balance between pursuing profits and serving the broader role of being a public good that promotes access to markets, financial inclusion and good corporate citizenry. This transition has transformed to BSE’s governance structure and led to the adoption in the adoption of King IV reporting framework. By any measure, this is a loud pronouncement of our commitment to promoting integrity in the operations of the Exchange, and demanding the same from listed entities for far more improved shareholder protection, stakeholder accountability and long term value creation.
The 2022- 2026 strategic plan was formulated against a mixed bag of considerations, including the political and socio economic factors. In developing the strategy, we have ensured that the process is inclusive of stakeholders, that we imbed the lessons from the past and that we leverage emerging trends and opportunities. Some of the key considerations impacting the new strategic plan include the positive developments around the containment of the COVID- 19 pandemic, a vaccine- powered economic recovery and general business optimism, both domestically and globally. It is evident that the burden of pandemic- induced fiscal expenditures has increased pressure on the Government to save the economy through the ERTP and to productively implement the Reset Agenda – with several positives arising from there. In addition, the State- Owned Enterprises ( SOEs) rationalization programme, which includes privatisation, and the delivery of projects through Public Private Partnerships ( PPPs) bear potential listings and increased appetite for long term capital which will subsequently promote capital market development.
The strategy provides a roadmap to adequately address identified performance gaps by honing the regulatory environment, broadening BSE’s commercial focus and optimising its technological capabilities. With this strategy, we remain focused on innovative undertakings to solidify the modernisation and internationalisation of the BSE.
Moreover, we are excited to pursue a transformational milestone of listing the BSEL Group, which by so doing, we expect to unlock significant governance and competitiveness that will position us a world- class multi- asset frontier stock exchange in the long term. As we usher in a new strategic period, we are re- energised to fulfil our role as a crucial pillar of our economy by meeting our targets. Internally, the groundwork has been laid in terms of setting the right corporate culture to drive the BSE’s performance. This is also reflected in our new corporate values compared to the previous ones. Furthermore, BSE’s mission has been refreshed to read, “To drive sustainable economic growth by providing a gateway for raising capital and accessing investment opportunities for the benefit of issuers, investors and stakeholders” and this was mainly to underscore our commitment to our broad spectrum of stakeholders as we exist for their benefit. The vision has remained unchanged, but embedded in our mind- set is that we aspire to be among the top frontier markets in the medium to long term.