As one of Africa’s most politically stable and economically successful countries, Botswana provides an excellent place for investors to make their first foray into the continent.
The country was my first Sub-Saharan investment destination, and the experience was so positive that it prompted me to explore other African exchanges.
My broker patiently walked me through the process of buying shares, provided some helpful research, and, perhaps most importantly, instilled a sense of confidence that my transactions would be handled professionally.
Opening a Botswanan Brokerage Account
Here’s what to expect when opening an account and buying your first shares.
I maintain an account with Stockbrokers Botswana and have found them to be responsive to questions from small, retail investors. This article describes the process of opening an account and trading through them.
Motswedi Securities, Capital Securities, and African Alliance also trade on the exchange, and the process of opening an account with them would be much the same. At press time, however, I had not received responses to my account opening queries from any of them.
Step 1: Complete and Return the Trading Account Application Form
The trading account application form requires that you disclose your passport or driver’s license number, your address, and banking details. It’s a pretty straight-forward form that you can complete, scan, and email back to the broker.
Step 2: Complete and Return the CSD Securities Account Opening Form
The Botswana Stock Exchange dematerialized all stock share certificates in 2009 and set up a Central Securities Depository (CSD) that records the ownership of securities in electronic accounts. This dramatically improved trading efficiency. The only drawback is that it added one additional form for new investors to complete. Complete the CSD Securities Account Opening Form and return it to your broker. You will then be assigned a CSD account number. This number will accompany every trade order you place, allowing the CSD to keep record of all your holdings in the country.
Step 3: Provide Two Certified Copies of Your Passport
One copy of your passport will be kept on file by your broker. The other will go to the CSD.
Step 4. Wire Funds to Your Brokerage Account
After opening your trading account, Stockbrokers Botswana will provide you with its bank details so that you can fund your account. The most efficient way to do this is via wire transfer. If you haven’t sent an international wire before, I suggest that you take your broker’s bank details to your local bank branch and ask them to walk you through the process. They’ll make sure that your funds arrive securely. Note that most US banks charge about $25 for outgoing international wires.
Step 5. Submit a Trade Order
You’ve done your research and found a stock among the Botswana Stock Exchange’s 23 domestic listings that you’d like to buy. What now?
If you have opened an account with Stockbrokers Botswana, you need only complete, scan, and email a Trading Mandate Form to their trading department.
Keep in mind that many listings on the Botswana Stock Exchange are nearly as illiquid as the Kalahari itself, so I advise specifying a limit price for all of your orders. This will help you avoid paying significantly more for your shares than you had intended to pay.
Your broker will then execute your trade and send you a contract note that specifies the buy or sell price, commissions, and fees.
Speaking of commissions and fees, here’s how much it will cost you to buy and sell stock on the Botswana Stock Exchange through Stockbrokers Botswana:
|BWP1.00 – BWP50,000.00 (≈ US$6,700)||2.07% + BWP16.80||2.07% + BWP11.20|
|BWP50,001.00 – BWP100,000.00 (≈ US$13,400)||1.68% + BWP16.80||1.68% + BWP11.20|
|BWP100,001.00 – BWP500,000 (≈ US$67,000)||1.40% + BWP16.80||1.40% + BWP11.20|
*Trades must be executed in lots of at least 100 shares.
Note that, like Zimbabwe, Botswana levies a 15% withholding tax on dividends. This is deducted by the issuing company before the dividend payment is made.
Investors can request that dividend payments be deposited directly into their trading accounts, thus avoiding the hassle of opening a local bank account.
That’s it! Follow these steps and you’re a Botswana investor.
The process of opening a foreign brokerage account can be confusing. If you found this walk-thru to be clear as mud, please don’t be shy. Post your questions in the comments, and I’ll do my best to get answers for them.