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’
Government is currently looking into alternative use of land for the controversial Palapye glass project that cost the Botswana Development Corporation (BDC) over P500 million.This was revealed by Permanent Secretary in the Ministry of Investment, Trade and Industry, Peggy Serame.
The project was in 2016 expected to be auctioned but interested bidders pulled out. Provisional liquidator for the Fengyue Palapye Glass project, Nijel Dixon-Warren, reportedly confirmed that his meeting with two potential buyers back then did not bring any desired outcome.
Serame told Parliamentary Public Accounts Committee (PAC) that following the liquidation of the project there were potential investors who wanted to take over the project. According to the PS after inspecting the plant the investors decided that they are no longer interested in the project.“Their reasons have been that the project would no longer be viable.
So currently we do not have any interested party in the project. We met recently to explore other options. We want to alternatively see what we can use the land for,” she explained. The 100-hectare property is located adjacent to the Serowe-Palapye junction.
The property was reportedly expected to fetch between P25 million and P180 million through auction in 2016. Among the goods on site are float glass plant and equipment, coal gasification plant, construction plant, and oxygen plant.
The project stirred controversy after it emerged that the Chinese company that was in partnership with BDC was a shelf company with no experience whatsoever in glass manufacturing. There was also confusion as to which company was in the project between Fengyue China and Fengyue of Cayman Islands.
In 2013 Parliamentary Special Select Committee of inquiry into the BDC found that the Palapye glass manufacturing project was bound to fail as it was premised on poor diligence, doubtful partner selection and a litany of project implementation violations.The report revealed that BDC opted to go into a joint venture with Chinese Shanghai Fengyue Glass Company, ignoring their function of encouraging citizen partnership in national business ventures.
It emerged that the company was appointed although it did not have the required technical expertise. BDC board members were also said to have been kept in the dark with regard to the partner selection process. Findings further revealed that the project was originally estimated to cost P309 million but ran additional costs which increased to over P500 million.
The appointment of an engineering, procurement and construction (EPC) contractor agreement between Fengyue Glass Manufacturing (Botswana) and Shanghai Fengyue Glass Corporation also raised eyebrows.
Fairgrounds Holdings, the top exhibitions and events hosting boutique is aiming to empower upcoming hospitality graduates by offering them opportunities to learn more from the industry while at the same time molding them to become well rounded professionals who can compete anywhere in the world.
The company that is owned by Botswana Development Corporation (BDC) and Botswana government has been helped by a consultant to come with a structured programme which will make it possible for graduates in various sectors of the hospitality industry to spend between three and six months at the company on an attachment basis. “There are several opportunities in the beverages, food, events management and culinary arts sectors which graduates can learn more about from Fairgrounds,” noted new Chief Executive, Gorata Gabaraane in her maiden meeting with the press recently.
In this regards, the company is planning to partner with local tourism and hospitality schools for the programme to become a success. It will appear there will be even more opportunities for graduates in the hospitality sector as Fairgrounds is planning to expand its facilities which will ensure they become an up market hub for events, networking, conferencing, entailment and eatery.
A pre-feasibility study on the expansion model has been made but details such as the costs and modalities for expansion are yet to be made public. “That will be made in the medium term,” said Gabaraane.
Fairgrounds sits on an area of 34 hectares, but only 20 percent of such land is utilised, said Gabaraane who has worked for Cresta, a listed hospitality group before joining the company. Meanwhile, the new broom at Cresta has also revealed they will be partnering with industry players to organise top events and conferences which will attract both local and international interests.
Fairgrounds is better known for hosting acclaimed events such as the annual Consumer Fair and the Global Expo organised by Botswana Investment and Trade Centre (BITC). ,
The company said it would continue to return to the community through their Corporate Social Investment activities, added Gabaraane.
Fairgrounds Holdings, a subsidiary of Botswana Development Corporation (BDC) has appointed Gorata Gabaraane as new Chief Executive Officer. She is an old hand in the hospitality industry, having worked for Cresta Hotels, a listed and leading hospitality group in Botswana. “An industry player of repute, Gabaraane also played a dual role during her tenure at LEA as Strategy and Organisational Design Manager,” said Fairgrounds Holdings.
She has also worked for Botswana Investment and Trade Centre (BITC) as Director of Strategy. The new broom at Fairgrounds is armed with Masters Degree in Strategic Management from the University of Derby in the United Kingdom. Gabaraane also has a Bsc degree in Hotel Restaurant and Institutional Management from Johnson & Wales University and a diploma in hotel management from Les Roches.
National Development Bank, the state-controlled bank has made an impassioned plea to government to inject P1 billon into its coffers to bring it back to life, its Chief Executive, Lorato Morapedi told a select parliamentary committee.
The NDB top executive’s request comes hot on the heels of yet another demand of the same amount, this time from Botswana Development Corporation (BDC), an investment arm of government. Morapedi, who has been at the bank’s hot seat for more than six years, told the Parliamentary Committee on Statutory Bodies and Public Enterprises at Parliament when she appeared before them this week. “Currently we have requested P400 million for this first year, second year we will need P165 million and the last one will be P250 million,” said Morapedi adding that they will also look at their options for funding.
She did not elaborate more on these options which are available for the bank to tap on. The bank has previously issued bonds to raise cash on the debt market. “Our focus is agriculture and SMMEs,” she said. According to Morapedi the current loan book of the bank is at P1.3 billion and 40 percent will never be recovered. A visibly incensed Chairman of the committee, Guma Moyo at this point asked the NDB boss why they should be trusted with funding. “We have a lot of expertise and robust Information Technology and have improved in monitoring.
We have been able to get to the bottom of these problems and we have been able to establish that some loans were given way back in 2009,”said Morapedi who has been given a fresh mandate to lead as from the bank last year.
A look at NDBs executive summary prepared to the committee shows that the bank recorded a total loss of P48.4 million for the year to March 2015 compared to P87.8 million in the previous year. During the period, overall comprehensive loss was P56.9 million from P69.2 million in the previous year. Impairments charge for March 2015 reduced by 48 percent when compared to the previous financial year figures. This is an indication of recovery.”
In the report which Botswana Guardian has seen, Morapedi said during the financial year 31 March 2015 the bank was faced with challenges such as; non-performing loan book, tight liquidity, high cost of funding, over borrowed customers and slow recovery of the economy. The bank which turns 53 this year, also reported that 38 percent of its loan book fell into non-performing loans status during the year under review (2014/15).
“This negatively affected the Bank’s liquidity position,” said the NDB report. The bank has since intensified its collections efforts and cost containment strategies. The bank said it needs more money to increase its loan book. Going forward, the bank will start investing in high margin portfolios as well as improving operational efficiency. Earlier this year, government suspended the bank’s privatisation citing a number of challenges such as decline in profitability, reduced banking rates and strained disposable income. Like BTCL, NDB’s privatisation process would also see the bank floating 49 percent shares in the domestic bourse.Minister of Finance and Development Planning, Kenneth Matambo said, “these challenges, unfortunately, delayed the privatisation of the bank.
To this end, a decision has been taken to first allow for the commercialisation of the bank and return it to profitability before embarking on a privatisation exercise.” The minister did not specify when the privatisation process of the bank would be reinstated.
Matambo said the bank’s profitability decline over the years is because NDB supports start-up businesses as well as finance agricultural projects, which are periodically affected by drought and livestock disease.
Sechaba Brewery Holdings Limited and Botswana Development Corporation (BDC), two major interested local parties in the proposed takeover of SABMiller by AB InBev, this week refused to make their opinions (on the deal) known.
The transaction, if it gets the nod, will have sweeping implications on all investments of SABMiller the world over. Naturally, BDC an investor at Sechaba, a group part-owned by SABMiller, will be affected in one way or another should the deal go through as it has implications on BDC continued investments at the leading beer maker. Sechaba, a local unit of SABMiller, has also chosen to remain tight-lipped on the deal which may come with restructuring, de-listing, divestment and possible job losses. According to data sourced from Sechaba’s latest annual report, BDC owns 25, 59 percent of Sechaba.
The latter owns 60 percent of the operating company Kgalagadi Breweries Limited (KBL). SABMiller Botswana BV owns 40 percent of KBL while SABMiller Africa owns 16,84 percent of Sechaba. The rest of the shareholders of Sechaba shareholders own 57,5 percent of the group. Motor Vehicle Fund (MVA) and some local institutional investors have stakes at Sechaba which has seen its profit margins taking a nosedive on the backdrop of the alcohol levy and traditional beer regulations. Alcohol levy, which is currently sitting at 55 percent, was introduced to curb alcohol abuse in the country, but it has since hurt Sechaba profits. On the other side, traditional beer regulations have restricted the selling of Sechaba’s opaque beer.
SABMiller has a management contract of KBL. Under the SABMiller and AB InBev deal, which is the biggest in the brewing industry to date, the latter has put over $100 billion before the former as purchase price. SABMiller has agreed to the purchase price, but no formal documents have been concluded and signed.
The deal is subject to several regulatory approvals in jurisdictions where the two beer groups have operations. If it gets the nod, it will mean all assets of SABMiller, including its shareholding in Botswana beer making group, Sechaba, will fall under AB InBev. An investment arm of government, BDC has refused to comment on the latest multi-billion Pula deal. “We as a shareholder are not in any position to comment on this takeover you are referring to as it is yet a subject of discussions by Shareholders. Thus far, any discussions would have been at the SABMiller PLC level,” said Head of Communications of BDC, Boitshwarelo Lebang. Sechaba, which is listed on the domestic bourse, also indicated that it is constrained to comment, referring BG Business to a statement issued by SABMiller.
“I’m afraid at the moment there is nothing more we can say beyond that which is in our statement,” the group spokesperson, Mokoro Ketsitlile said in an emailed response on Tuesday. Across the border in South Africa, the deal has already met resistance among shareholders and trade unions. Public Investment Corporation (PIC), a pension fund manager for South African government said if the deal passes it will create a dominant brand that will hurt consumers. “Quite frankly I’m not in favour of it,” Chief Executive Daniel Matjila told Bloomberg news agency recently. “We may be creating some kind of a monopoly going forward which may have a serious impact on the global economy and beer market in general.” PIC owns just over 3 percent of SABMiller.
Congress of South African Trade Unions (COSATU) said in a statement that, “We will never allow a situation where the South African offices of SABMiller are relocated away from South Africa and the local revenues are spiraled out of the country to the detriment of the entire economy.” In a related matter, both SABMiller and AB InBev SABMiller on Wednesday extended the deadline for rival Anheuser-Busch InBev to make a formal $100 billion- plus takeover offer by a week. The two companies said in a statement on Wednesday that London’s Panel on Takeovers and Mergers had granted SABMiller’s request to push back the deadline to 17:00 on Wednesday, November 4. The Takeover Panel already granted a two-week extension from an initial October 14 deadline after the two parties said they had reached a preliminary agreement on a merger.