Connect with us

DPF investment drive pays off, FUND clocks BWP8 billion mark

Debswana Pension Fund, Botswana second largest and the country’s leading private sector pension fund continues to deliver upward trajectories as it pursues its quest of diversifying its investment portfolio and cultivating wealth for its members.

Information from the fund, released late last year mirrors impressive performance for the Fund’s major investment portfolios in the first three quarters of 2019 amid the year’s challenging economic circumstances. The third quarter of 2019, ending September 2019 presented a third consecutive quarterly positive investment performance by the Fund’s assets. Performance for the quarter was characterized by satisfactory returns in the Market, Conservative, Pensioner and Contingency Channels.

The Fund’s Net Total Assets increased 2.96 percent from BWP 7.861 billion in Quarter 2 2019 to BWP 8.103 billion in Quarter 3.  The positive returns according to DPF were partially driven by the continued rally in international markets led by Developed Market equities.
Furthermore the Fund experienced positive performance in the third quarter of the year, with the Market Channel increasing 3.02 percent, the Conservative Channel rising 2.79 percent and the Pensioner Channel returning 2.92 percent.

On a twelve-month basis, the Fund generated positive returns net of investment fees, the Market Channel reporting a return of 6.43 percent followed by the Pensioner Channel at 7.64 percent while the Conservative Channel returned 7.20 percent. Executives at Debswana Pension Fund say decelerating global growth and lower inflation forecasts across developed markets have resulted in key interest rate cuts and supportive monetary policy by major central banks, which has underpinned global stocks and bonds. In addition, the local equity market marginally contributed to the positive performance as the domestic listed equity managers posted flat returns.

The top performing asset class for the Fund was property, which returned 6.31 percent (in BWP). The next top performing asset class for Quarter 3 was private equity, which returned 6.03 percent, followed by global bonds, which returned 4.14 percent. Foreign equities extended their gains as the appetite for listed stocks surged, in anticipation of further interest rate cuts and elevated corporate earnings in certain sectors of the economy. Global equities returned 4.10 percent while the Domestic Companies Index decreased 1.03 percent on a total return basis. Emerging Market equities gained 1.70 percent.

In an environment of positive performances by global equity managers, Veritas was the Fund’s outperforming manager for Quarter 3 with a return of 5.27 percent. Marathon was the second best performing manager returning 4.81 percent. The least performing global equity manager was Southeastern, posting a modest 0.55 percent. Local equities returned an above benchmark return.

The Botswana Stock Exchange Domestic Company Index, which declined 1.03 percent over the quarter, underperformed Allan Gray which returned -0.16 percent and Investec which remained flat at 0.01 percent. Of the two Local Bond managers, BIFM was the top performer, posting a return of 1.39 percent for the quarter, ahead of Investec’s gain of 1.00 percent. In 2018 Debswana Pension Fund, established a subsidiary fund administration company to which it outsources benefit administration functions, bearing the name Mmila Fund Administrators.

In her 2019 end of year message Debswana Pension Fund Chief Executive Officer, Gosego January revealed that Mmila has been granted a license as a response to regulatory changes in the Pension Fund industry, which came into effect in April 2017. “Against this background, I am pleased to advise that Mmila Fund Administrators is now fully operational and there has been a seamless transition between the two entities,” she said.

January explained that Global Markets have remained somewhat challenged largely due to the US-China Trade War that brought about market uncertainty and volatility consequently leading to loosening of monetary and fiscal policy in markets such as the US and EU.
“We are however pleased that despite these market headwinds, the fund performance has been strong and grew quarter by quarter, crossing the BWP 8 Billion mark at the end of Quarter 3 2019, Growing Returns for our members is a top priority for the fund and in so doing, we continue to identify areas of investment and pay close attention to global emerging trends.”

In 2019 The Fund commenced roll out of its 2019-2023 strategy, according to January the strategy will deliver even more returns to its members in 2020. “There are potential market challenges as has been speculated, however, I believe that DPF is poised to attain greatness in 2020 and beyond,” she said.

Continue Reading


Botswana on high red alert as AML joins Covid-19 to plague mankind

21st September 2020

This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.

The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.

This content is locked

Login To Unlock The Content!

Continue Reading


Finance Committee cautions Gov’t against imprudent raising of debt levels

21st September 2020
Finance Committe Chairman: Thapelo Letsholo

Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.

He was speaking in  Parliament on Tuesday delivering  Parliament’s Finance Committee report after assessing a  motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.

This content is locked

Login To Unlock The Content!

Continue Reading


Gov’t Investment Account drying up fast!  

21st September 2020
Dr Matsheka

Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.

The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.

The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.

The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.

This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.

Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.

Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.

However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.

Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.

When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.

This  as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.

Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.

The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.

Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.

In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.

Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.

Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.

Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.

Acknowledging the need to draw down from GIA no more, current Minister of Finance   Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”

He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”

Continue Reading
Do NOT follow this link or you will be banned from the site!