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.