Tuesday, 13 September 2016 10:19

Which way BDC?

Bashi Gaetsaloe, the day-to-day manager of Botswana Development Corporation is the right man to lead the government investment arm.  The same also applies to Blackie Marole, who chairs a well-composed board of directors that gives BDC management strategic advice periodically.

Gaetsaloe is a shrewd business manager. On the other side, Marole is a well-rounded leader and economist, who at some point was Managing Director of gem producer, Debswana. Similarly, his management head has led high profiled blue chip companies with astute acumen such as KPMG and Accenture Botswana. Although Marole was appointed in 2011, while his Managing Director was only appointed in April, 2014, we all punched the air in the hope that these two men are perfectly placed to lead BDC, which at the time was not performing well.

However, there are some developments that are coming from BDC; especially its cash raising exercise and which projects they will be investing in after they get the nod from government. News coming from Fairscape, BDC headquarters, is that the government’s investment arm wants the sole shareholder, government, to act as a guarantor for its loans amounting to just over P1 billion.  In basic economic terms, this means government will pay the loan should by any means BDC default in its payment for whatever reason. This happens all the time in Botswana and elsewhere. The burning matter, however, is thatBDC wants to invest in projects which are already mature and cannot change the economic landscape of the country and create the much-needed jobs.

For example, the P1billion loan will among others be used to fund BSE listed micro-lending titan, Letshego Holdings. The last time we checked, this Gaborone-based company‘s balance sheet was on the green.  The company’s market value is even bigger than that of BDC. Letshego is fully capitalised to fund its African push. It has just received a banking licence in Namibia. Its Managing Director, Chris Low, has told Botswana Guardian in a previous interview that, should they need any funding, they will tap into their medium term notes (bonds) to raise cash. So the question is, what is attracting BDC to Letshego?

The company is well on its feet, as is a market leader in the micro-lending industry. It is poised to become a market leader in the continent in the medium to long term. At his maiden press conference, Gaetsaloe said he wants BDC to invest in projects that can have a meaningful impact on the economy and create jobs. However, Marole and Gaetsaloe must tell us, how by funding Letshego, they will ensure jobs are created by taxpayers’ funds.We want the two gentlemen to shows us that, if parliament approves their request, how will they ensure that, Ba Isago University will create more jobs. Ba Isago, like any tertiary institution in Botswana, depends on government-sponsored students for survival. Government, which is likely to post an expanded budget deficit in the current financial year, has announced plans to cut tertiary institutions funding for students. This basically means Ba Isago, like its peers, will be adversely affected by the move, which is forced by government’s tight budget.

Then where will BDC’s return on investment come from? Does this mean BDC wants to gamble with our taxes? This does not in any way mean investment is not a risky undertaking, but there are instances where risks can be avoided at all costs.  We also read that government’s investment body wants to invest in a dairy project in Lobatse. The project is owned by a company called MilkAfric. As things stand, it has partnered with Lobatse town council for the development of dairy plant. There are questions that we need BDC to answer before they invest in the project.

Some years ago, BDC mulled the establishment of a dairy project. However, it would later abandon the project reasoning that it was not a viable project. So what is making dairy production a viable project at this point in time? What else has changed in the market since they abandoned the project? We need these questions answered first before BDC sinks its capital there. This does not in away take away the fact that Botswana gets more than 80 percent of its dairy needs from South Africa. By this, it cannot be taken that BDC should invest in dairy projects, whose sustainability and profitability cannot be guaranteed now. What we need to hear more from BDC is that, now that they have been given the leeway to invest beyond borders, where are such plans?

Some African countries such as Ethiopia are registering double-digit growths. Is the company not seeing this? We all know the past challenges of BDC. Our belief and indeed our hearts tell us that, Marole and Gaetsaloe know the painful past that BDC had to go through  in the past five years or so. They cannot allow BDC to fall in the same pit. So while they have made an impassioned plea to government to back their financial needs, we are of the view that there are other viable projects that need to be funded. There is a bold statement on the BDC 2015 annual report that, ‘Leading the way towards the industrilisation of Botswana’. 

We need BDC to live by this. We want a BDC which invests in projects that can industrialise Botswana. Surely, not in the above mentioned entities.
*Koobonye Ramokopelwa is a Business Editor at Botswana Guardian

Published in News

A Johannesburg-based lawyer representing Shanghai Fengyue company told Botswana Guardian this week that Finance Minister, Kenneth Matambo has to be investigated for flaunting corporate governance at Botswana Development Corporation (BDC).

Jack Hajibey criticised Botswana government for failing to notice the economic value of the Palapye Glass Project between Shanghai Fengyue and Fengyue Glass Manufacturing Company Botswana. The two are in a controversial joint venture in a hi-tech float glass-manufacturing outfit in Palapye at a cost exceeding P500 million.

“No body is worried about the project, which was supposed to have been completed in September and is 70 percent done. You people are concerned about P12.9 million that was credited into my account,” said Hajibey on Tuesday when Botswana Guardian reached him for comment over a mysterious accreditation to his Nedbank trust account.

He said the US$1.9 million was a refund for delayed payment and was immediately paid to sub contractors and other workers at Fengyue. Efforts to reach Nedbank proved futile. “This project was supposed to be in South Africa, but President (Festus) Mogae persuaded Chinese investors to open it in Botswana. He promised them all sort of things; free tax, funding.” said the attorney.

“Now Botswana politics is killing that project,” observed Hajibey, adding that Chinese investors did not gain in the project, which is currently under investigations. Hajibey and Chinese investors at Shanghai Fengyue refused to cooperate with Parliamentary Special Select Committee Inquiry on the glass project.

However, Criminal Investigations Department interrogated Hajibey in Johannesburg. “All corruption issue is rubbish. We have been investigated,” he charged. “There is no margin to steal P100 million. Why did BDC delay funding the project for 16 months?” he wondered. He accused BDC Board and Matambo for “imposing” unqualified candidate to lead BDC.

“She (BDC Managing Director, Maria Nthebolan) was imposed on BDC, she was imposed on us. Ask your finance minister, not us, he knows why he employed her,” said Hajibey. “From the Chinese side, not even a single P1 was taken by us,” he added. He could not account for a sum of US$1.5 million that was accredited to Shanghai Fengyue director, William Wu Mong Seng in Macau, China.

The project was expected to employ over 1000 when it was fully operational. “Material is lying there, rusting, you worry about unnecessary issues.”Both Nthebolan and Matambo were not available for comment.

Published in News
Thursday, 15 November 2012 13:05

We are clean on BDC – StanChart

The Botswana Stock Exchange (BSE) listed bank, Standard Chartered Bank said it did nothing wrong when it approved transactions between Botswana Development Corporation (BDC) and a controversial Chinese glass company, Shanghai Fengyue.

The bank was responding to Botswana Guardian inquiries into how it allowed unlawful guarantees that oversteps the parameters of BDC Board.  This follows reports from Parliamentary Special Select Committee on the inquiry on BDC glass manufacturing project in Palapye, which indicates that in December 2009, BDC and Fengyue made “curious” payments to individuals in which in some cases caught the curiosity of Standard Chartered Bank of China.

“The establishment of the Letter of Credit in question and all transactions thereunder were effected with due compliance to international and country laws, regulations, credit procedures and with the full knowledge of both the applicant and the guarantor,” the bank spokesperson, Tumi Ramsden told Botswana Guardian in an email.

However, the enquiry shows that when Fengyue Glass Manufacturing Botswana made a Letter of Credit in the cumulative sum of P22 million to Jack Hajibey and William Wu Mong Seng, Standard Chartered Bank of China “raised serious queries" about Wu Mong Seng credibility to receive US$1.5 million or P9.7 million in commission. It is the conclusion of the Parliamentary committee that the local bank failed to exercise judgement and advised BDC.

The bank is "required by both international and local laws and regulations to maintain strict confidentiality about customer/client information except where disclosure is permitted by the law.”

One of Standard Chartered Bank employees, Phillip Setiko indicated to a Parliamentary Committee that his counterpart in Asia was worried about the seemingly unlawful transaction. BDC is being investigated for allegedly inflating prices at the multimillion Palapye glass project and venturing with an inexperienced Chinese company. The P500 million project is currently suspended.

Listed on the main board, Standard Chartered is one of the biggest retail banks in the country and the oldest with a market capitalisation of P2.9 billion. A banking source says the bank contravened international transaction laws.

Standard Chartered is 75 percent owned by Standard Chartered Holding (Africa) BV, with the Motor Vehicle Accident Fund holding 10 million shares or 3.36 percent. Other minority shareholders include Stanbic nominees (BIFM) with 2.48 percent and BOMAID with 0.17 percent. The bank closed flat on Wednesday with a share price of 1000 thebe per share.

By press time, it was not clear whether the central bank would summon the listed bank over BDC financial irregularities.

Published in Business
Thursday, 15 November 2012 12:54

Another BDC embarassment

Another gaffe knocks on the door of Botswana Development Corporation with potential risk of losing over P200 million worth of assets in the state-of-the-art Can Manufacturers factory in Lobatse.Built at a capital investmet of P126 million the plant, which was inaugurated in 2007 and hailed as a “wise investment,” could soon be liquidated, And already prospective buyers are keeping a close watch on the development.

Infact, the plant, which initially employed 30 people and was expanded at a cost of P76 million some five years ago, already has a suitor. It is none other than the South African entity, Nampak Packaging Company. Botswana Guardian investigations have found that BDC is already negotiating with Nampak, whose queer terns are not to invest locally but to buy the state-of-the-art machines at the factory and relocate them to South Africa.

Nampak allegedly proposes in its terms to then bring its second-hand equipment for use at the Lobatse plant. According to insiders, BDC is standing on one leg and has no lout. Nampak has made it clear that should the embattled investment arm reject tnis offer, they would patiently wait for Can Manufaturers to liquidate and then buy the equipment for a song.

The state of the art machines can produce up to 600 cans per minute and 500 000 cans per day on a double shift. When fully operational, Can Manufacturers was expected to produce approximately 150 million cans annually in two 8 hours shifts 5 days a week. Can manufacturers; main client is Botswana Meat Commission (BMC).

The Lobatse plant was informed by a feasibility study undertaken in 2002, which identified an unmet demand for food cans in the SADC region and justified the entry of additional players in the industry. Some of the BDC investments that went bust include Hyundai, Selibe Phikwe Textile manufacturing companies and Lobatse Tile.

In all the occasions where a local company failed to operate successfully a South African Company has always ended up being the beneficiary. Efforts to contact both BDC and the Can Manufacturers officials for comment were not successful.

Published in News

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