BDC strategy continues to pay off

Koobonye Ramokopelwa - BG reporter
Thursday, 20 December 2018
BDC strategy continues to pay off

The country’s investment firm, Botswana Development Corporation (BDC) has disclosed that a multi-pronged strategy, hatched four years ago, is bearing fruits and results, both operationally and financially.

The government-owned entity, which is under the leadership of astute  corporate leader, Bashi Gaetsaloe recently revealed its financial results for the year to  June 2018, where profit before taxation jumped 39 percent year on year, closing at P187 million. “It was a year of transformation for us,” said a thrilled Gaetsaloe, who together with the board led by Blackie Marole are the architects of BDC’s five year strategy (2014-2019). The profits are up despite the country’s sluggish economic recovery which has dented investment sentiments. Low interest rate regime has also not helped the situation.

According to Gaetsaloe, during the year under review, the business continued to focus on reducing wastage, improving working capital, sustainable growth as well as increasing value for the shareholder (Botswana Government). In the year passed, the Corporation realised a growth in interest income of 20% to P42million against P35million reported in the prior year. “This was a reflection of the expected growth in debt assets, a milestone achieved in correlation with BDC’s business strategy to rebalance the equity/debt asset profile,” commented the company.

BDC, which in the past was forced to suspend its bond program on the backdrop of past corporate flows which negatively affected perception from potential funders, even managed to raise P600 million from the local market, “All this money came from the local banks,” Acting Chief Financial Officer, Maranyane Makhondo told Botswana Guardian.BDC has also established an investment fund and a reserved fund which has P230 million.

The group, which has shareholdings on listed and unlisted firms locally, has approved as much as P500 million investment on new businesses, with just over P180 million having been disbursed.  “Some funded companies are starting up,” stated Gaetsaloe last Thursday. Sectors which are expected to benefit from the half a billion Pula will be healthcare, logistics, manufacturing, among others. The BDC Chief speaks highly of their successful investments on Pasdec, an automotive parts manufacturer in Lobatse as well as Transport Holdings Limited, a revered transport and logistics group with contracts in Botswana and the region. Pasdec is expected to employ over 1000 people having recently won a P1 billion international tender with Nissan.  The group also completed the liquidation of its failed glass manufacturing plant in Palapye, named Fenguye. The land where the plant was to be will be leased to interested manufacturing companies.

Meanwhile, Chief Investment Officer, Moatlhodi Lekaukau told stakeholders that, they have already made notable progress as far as investing in the continent is concerned. The first target has been the West African region where the group has just completed a deal which will see them investing on a company in the telecommunications and mobile payments. In Ghana, BDC is eyeing the country’s energy sector while in Uganda, possible participation on an oil refinery are currently being explored.

Lekaukau, former Standard Chartered CEO, said they will be looking at companies which can also in return invest in the local markets. The outward investments are being done cautiously, stressed Gaetsaloe and Lekaukau. The group is well aware of tight competition, political, economic challenges and regulatory bottlenecks in the African continent that are often not easy to maneuver. Nonetheless, Gaetsaloe said BDC remains stronger than never before.

“Our underlying business remains strong and our results come off the back of our success in driving new business growth as we continue to scope for local and continental partnership opportunities in our targeted sectors,” he said. ‘Such interests are mainly in industries that can deliver significant contribution towards Gross Domestic Product (GDP) and the wider socio-economy. The Corporation has continued to stabilise post our Transformation Programme which entailed a robust turnaround review of our processes, structures and policies’

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