Punters will have to wait a little longer before they can get hold of National Development Bank (NDB) shares, as the lender’s privatisation process will be delayed, Botswana Guardian has learnt.
A cocktail of problems has led to the postponement in selling 49 percent of the 53 year-old development bank to the public, minister of Finance and Development Planning, Kenneth Matambo told lawmakers this week. Two years ago, legislators gave thumbs up to NDB Transitional Act, which paved way for the privatisation of the development bank as well as registering the bank as a company.
On Tuesday, the minister said a number of challenges such as decline in profitability, reduced banking rates and strained disposable income have put brakes on the bank’s privatisation exercise, which could have been at an advanced stage by now. Like BTCL, NDB’s privatisation process would also see the bank floating 49 percent shares in the domestic bourse. However, the time is not now, as NDB has to be profitable before it can be sold.
Early this month, Matambo said NDB registered a loss of P37, 2 million in 2015, compared to a net loss of P86, 3 million the year before. Like commercial banks in the country, the state-owned lender is struggling to cope with low interest regime.
At 6 percent, the key-lending rate is at a two decade low. The property market has also faced challenges, as prices for houses have also been affected, in the process limiting the bank’s ability to generate fresh loans on property sector. 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.
“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,” said Matambo.
The minister did not specify when the privatisation process of the bank will be reinstated. Meanwhile, the finance minister told parliament that the bank, which offers financial services to most sectors of the economy, has implemented a turnaround strategy, which started last year.
The strategy among others is targeted at reducing non-performing loans. A source in the bank told Botswana Guardian that there will be a ‘notable’ improvement in the lender’s financial statement in the year that will end this March (2015/16).