The privatisation of the state owned National Development Bank (NDB) is approaching its final stages, according to sources close to the transition. Government approved NDB privatisation in March 2011, which has since been spearheaded by the Public Enterprise Evaluation and Privatisation Agency (PEEPA).
Information reaching this publication indication indicates that for privatisation to take place, PEEPA needed to transform NDB into a company under the Companies Act. However, PEEPA Principal Communications Manager, Montlenyane Baaitse revealed this week that a draft Bill (NDB Transition Bill) that will facilitate the transformation of NDB into a limited liability company is complete and awaits parliament approval.
“While the transformation process is on-going, PEEPA together with the Ministry of Finance and NDB has put in place various consultative structures to engage stakeholders about the impending privatisation exercise,” she said.
As a Statutory Corporation established under the National Development Bank Act of 1963, NDB’s privatisation can only be implemented after it has been converted into a company with share capital and registered under the Companies Act. The process of converting NDB into a limited liability company requires enactment of a Transition Act to provide for the conversion, but Baaitse said the challenge is that the conversion process takes time.
She said cabinet has considered and approved the NDB Transition Bill, and is currently waiting to be presented to parliament, which could determine the privatisation turnaround time.“There is no definite turnaround time yet. However, once the Transition Act has been passed, it could take about five to six months from commencement stage, assuming the Bill would be presented during the July 2013 session of Parliament,” she told BG Business.
Baaitse could not shed light on the restructuring of the NDB after privatisation saying it would be the prerogative of the Board and management of a privatising entity. In the process of NDB’s conversion into a company, the bank will have to apply to Bank of Botswana for issuance of a commercial banking license, which will permit it to offer new services that may result in restructuring the bank in order to effectively position it for its new role.
Meanwhile, government has approved a privatisation structure, which entails retaining a lions-share of the NDB shares, while 49 percent is to be sold through an Initial Public Offering (IPO). Of the 49 percent stake that will be sold, 44 percent will be listed on the BSE with 30 percent restricted to citizens of Botswana and Botswana registered companies, while the remaining 14 percent is open for subscription by any interested investor including non- citizens. The other 5 percent will be reserved for citizen employees of NDB through an envisaged Employee Share Ownership Plan.