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Introducing Bourse Africa Africa and her minerals What about Botswana
Pan-African exchange, depository and central counterparty clearinghouse, operating on a hub and spoke model across the Continent Initially, a commodity spot & futures exchange agri, metals, energy before expanding rapidly into currencies and then other asset classes Africas 1st derivatives and central counterparty clearinghouse (ex-SA) Delivering price discovery, procurement, trade, risk management, arbitrage and investment to African and global market participants US$100+ million initiative, promoted by Financial Technologies Group in partnership with prominent African institutions
Bourse Africa 2009 20091109 African Export Import Bank Lusaka Seminar
Bourse Africa 2010 20100630 Bourse Africa: Botswana Resource Conference
Pan-African Level: A public-private partnership blending the best of Africa and Asia
Financial Technologies (FT) Group among the worlds major promoters of exchanges in emerging markets Leading African Institutions bringing the knowledge, experience, contacts and profile across the African continent
Botswana Hub: Company registered in September 2007, licensed by NBFIRA and Bank of Botswana, accredited by the Botswana International Financial Services Centre African National/Regional Level: Joint ventures with prominent institutions in each country of presence across the continent Pan-African Advisory Board: Chaired by former President Mogae of Botswana; includes former presidents of AfDB and Afreximbank Directors and Management Team: Bring extensive experience of establishing and operating exchanges in emerging markets A fully commercial, for-profit venture representing a significant foreign direct investment into Botswana and multiple African countries across the Continent
Nigeria is Africas single largest commodity exporter, but only the 18th largest in the world
207.6 193.9 183.1
Botswana is the 83rd largest, with approx 1.3% of total African commodity exports
Most African countries are too small in global terms to realistically support a world class exchange Exchange-trading for Africas commodity base therefore requires a pan-African approach
Bourse Africa 2009 20091109 African Export Import Bank Lusaka Seminar
Bourse Africa 2010 20100630 Bourse Africa: Botswana Resource Conference
Network of exchanges set up across the continent Combines country focus with continental scale Aggregates liquidity, reduces transaction costs
Bourse Africa 2009 20091109 African Export Import Bank Lusaka Seminar
Bourse Africa 2010 20100630 Bourse Africa: Botswana Resource Conference
Why Botswana?
Stable, transparent political governance Robust, open, growth-oriented economy Progressive international relations Free, open and tolerant society Rule of law
Spot contracts:
Buy, sell and trade the physical commodity Delivery versus Payment Designated quantity, quality & delivery points
Bourse Africa 2009 20091109 African Export Import Bank Lusaka Seminar
Bourse Africa 2010 20100630 Bourse Africa: Botswana Resource Conference
Under Guarantee
Underpinned by a Central Counterparty Clearinghouse (CCP), and backed by a Settlement Guarantee Fund (SGF)
Bourse Africa 2009 20091109 African Export Import Bank Lusaka Seminar
Bourse Africa 2010 20100630 Bourse Africa: Botswana Resource Conference
Transparency/Full Audit Trail Real Time Trade Information Efficient Price Discovery T+1 Settlement Cycle Regulated in line with International Standards
Bourse Africa 2009 20091109 African Export Import Bank Lusaka Seminar
Bourse Africa 2010 20100630 Bourse Africa: Botswana Resource Conference
Bourse Africa 2009 20091109 African Export Import Bank Lusaka Seminar
Bourse Africa 2010 20100630 Bourse Africa: Botswana Resource Conference
GDP /capita growth was -0.2 percent in 1980-95, accelerated to 2.90 percent in 2006-07; World Bank forecasts 4.5% GDP growth for 2010, rising to >5% in each of 2011 and 2012
Evidence suggests that the growth push observed after 1995 was driven mainly by the commodity boom With the commodity boom, investors were attracted to Africa to take advantage of Africas huge commodity potential. Between 2000 and 2006 foreign direct investment to the region almost tripled, and the bulk of these investments went to resource-rich countries. Oil producers Angola, Equatorial Guinea, Nigeria and Sudan alone received 63 percent of all FDI that went to the region in 2006
Bourse Africa 2009 20091109 African Export Import Bank Lusaka Seminar
Bourse Africa 2010 20100630 Bourse Africa: Botswana Resource Conference
About 26% % of GDP ( 41% in 2008) More than 90% of total exports (in 2006) About 32% of FDI Significant source of employment and taxation
Marketing arrangements that allow producers to sell at a price level that reflects the markets supply/demand equilibrium This translates into a fair level of profits / taxes / royalties for the companies / government / people of Botswana.
Booms may not be sustainable and therefore need to be managed carefully Sudden price declines can lead to shocks in the areas of balance of payments, national income, employment and taxation
Currency Risk:
Governance Issues
Transparency on prices, payments and marketing Botswana as an example of doing things the right way
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Purchasers / Traders Banks (bundling hedging with procurement & finance solutions)
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Associations / Cooperatives / Microfinance Instritutions (for agri- and smaller-scale entities) Government Agencies (as applicable)
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Finance: Accessing lower-cost bank finance on the back of hedging exposure to price risk, and/or secure warehoused commodity collateral
1 billion people, 53 countries, 4-5% p.a. growth, emerging middle class, $320b annual commodity base, rapidly integrating with global markets
Trade a whole continent of opportunities through one exchange Range of new commodity and currency products Combined spot and derivative platforms
Thank You!
Bourse Africa 2009 20091109 African Export Import Bank Lusaka Seminar
Bourse Africa 2010 20100630 Bourse Africa: Botswana Resource Conference