National Development Bank (CEO) Chief Executive Officer (CEO), Lorato Morapedi has revealed that the country’s oldest development bank has engaged on soul searching in a bid to figure out a business model that will return the bank to profitability.
The bank is one of quasi-government institutions which had been earmarked for privatisation, but persistent financial problems over the years has stalled the progress. “When I came in, the mandate was very clear; to lead the bank through transformation that was needed to prepare the bank for privatisation,” Morapedi told WeekendPost in an exclusive interview. “We need to commercialise the bank, putting the bank in position that it would be able to apply for a banking license. I want it to be a fully-fledged bank before it can be privatised.”
The desire to transform the bank has not been easy on the ground, with Morapedi having to deal with legacy issues at the bank. Over the years, NDB had developed unpleasant reputation relating to its financial performance, a culture that Morapedi had to turnaround after taking over the reins in 2010. Mainstay in the NDB financial quagmires was the bank’s funding model, which caught the attention of Parliamentary Committee on Statutory Bodies and Public Enterprises in 2016.
“Development needs patient capital and NDB in the past was expected to raise money from money markets. It is not sustainable. We were forced to loan at high rate and they [SMEs] are not be able to meet their obligations,” observed Morapedi. “A more sustainable model is in two force; either NDB continues as FDI, then we need access to affordable or cheap funding for patient capital, or if we are to transform into the commercial space, we will need to have the other side, deposit taking because that is where cheaper funding will come from.”
NDB has been funding its loans from the money acquired from commercial banks, which both the shareholder, board of directors and executive management agree that it is bad business and is not sustainable for a development bank. The current funding arrangement was brought about by government’s decision to stop issuing bonds to NDB to raise the funds. NDB has been sourcing its funds from BIFM Capital, Barclays Bank and First National Bank Botswana (FNBB) at interest rate of 8.5 percent, and 9.5 percent for BIFM capital.
Morapedi concedes that the arrangement is not sustainable given the fact that they are also competing with commercial banks. In 2016, NDB’s loan book stood at P1.3 billion, and out of that P600 million had been placed under doubtful debt, of which P300 million was to be written off. Morapedi said Ministry of Finance, which NDB falls under appreciates what the bank is going through and the ministry has been backing the organisation to keep it afloat.
NDB was given P400 million by the ministry during 2016/17 financial year, while P200 million was disbursed during the current financial year. “When I came in together with the team that I found here, we all agreed that it is important to look at all key facets of the business; the people processes and the business,” she said.
“Priorities were systems and people. And immediately we embarked on system change. The system that we were using was not robust enough to afford us to give the excellent service that we wanted to give our clients, to be able to give us a good springboard in the journey that we wanted to embark on. We all agreed that we need robust integrated system.” While the new system was expected to be the beginning of good things, it however revealed more than they expected.
“After we implemented the new banking system, we realised that we had more non-performing loans than we thought, that over the years our predecessors were not aware of,” said Morapedi. The financial problems also meant that the bank had to do something to cut the cost. During Morapedi’s tenure as CEO, NDB underwent two retrenchment phases, first in 2012 and secondly in 2018, resulting 23 and 56 people going home.
In the latter retrenchment, the bank had to part ways with P48 million. The retrenchment has left the bank “leaner”, something which Moropedi believes it will bring efficiency. “On the people’s space, we embarked on restructuring exercise because we were quite alive to the fact that if we are going to be able to transform the bank, there are certain skills particular banking skills that we needed that we didn’t have,” she said. “The bank has to be in a good state; to be able to breakeven.
Privatising will only happen after the bank has applied for a licence.” Government has adopted a privatisation strategy similar to the one used by BTCL, in which government retains 51 percent in the entity and 49 percent is offered to the public, of which 5 percent will be offered to the NBD employees.
While there is no hard-and-fast rule in politics, former Molepolole North Member of Parliament, Mohamed Khan says populism acts in the body politic have forced him to quit active partisan politics. He brands this ancient ascription of politics as fake and says it lowers the moral compass of the society.
Khan who finally tasted political victory in the 2014 elections after numerous failed attempts, has decided to leave the ‘dirty game’, and on his way out he characteristically lashed at the current political leaders; including his own party president, Advocate Duma Boko. “I arrived at this decision because I have noticed that there are no genuine politics and politicians. The current leaders, Boko and President Dr Mokgweetsi Masisi are fake politicians who are just practicing populist politics to feed their egos,” he said.
Former Botswana Democratic Party (BDP) parliamentary hopeful, Lawrence Ookeditse has rejected the idea of taking up a crucial role in the Botswana Patriotic Front (BPF) Central Committee following his arrival in the party this week. According to sources close to development, BPF power brokers are coaxing Ookeditse to take up the secretary general position, left vacant by death of Roseline Panzirah-Matshome in November 2020.
Ookeditse’s arrival at BPF is projected to cause conflicts, as some believe they are being overlooked, in favour of a new arrival. The former ruling party strategist has however ruled out the possibility of serving in the party central committee as secretary general, and committed that he will turn down the overture if availed to him by party leadership.
Ookeditse, nevertheless, has indicated that if offered another opportunity to serve in a different capacity, he will gladly accept. “I still need to learn the party, how it functions and all its structures; I must be guided, but given any responsibility I will serve the party as long as it is not the SG position.”
“I joined the BPF with a clear conscious, to further advance my voice and the interests of the constituents of Nata/Gweta which I believe the BDP is no longer capable to execute.” Ookeditse speaks of abject poverty in his constituency and prevalent unemployment among the youth, issues he hopes his new home will prioritise.
He dismissed further allegations that he resigned from the BDP because he was not rewarded for his efforts towards the 2019 general elections. After losing in the BDP primaries in 2018, Ookeditse said, he was offered a job in government but declined to take the post due to his political ambitions. Ookeditse stated that he rejected the offer because, working for government clashed with his political journey.
He insists there are many activists who are more deserving than him; he could have chosen to take up the opportunity that was before him but his conscious for the entire populace’s wellbeing held him back. Ookeditse said there many people in the party who also contributed towards party success, asserting that he only left the BDP because he was concerned about the greater good of the majority not individualism purposes.
According to observers, Ookeditse has been enticed by the prospects of contesting Nata/Gweta constituency in the 2024 general election, following the party’s impressive performance in the last general elections. Nata/Gweta which is a traditional BDP stronghold saw its numbers shrinking to a margin of 1568. BDP represented by Polson Majaga garnered 4754, while BPF which had fielded Joe Linga received 3186 with UDC coming a distant with 1442 votes.
There are reports that Linga will pave way for Ookeditse to contest the constituency in 2024 and the latter is upbeat about the prospects of being elected to parliament. Despite Ookeditse dismissing reports that he is eying the secretary general position, insiders argue that the position will be availed to him nevertheless.
Alternative favourite for the position is Vuyo Notha who is the party Deputy Secretary General. Notha has since assumed duties of the secretariat office on the interim basis. BPF politburo is expected to meet on 25th of January 2020, where the vacancy will be filled.
Botswana Democratic Party (BDP) big wigs have decided to cancel a retreat with the party legislators this weekend owing to increasing numbers of Covid-19 cases. The meeting was billed for this weekend at a place that was to be confirmed, however a communique from the party this past Tuesday reversed the highly anticipated meeting.
“We received a communication this week that the meeting will not go as planned because of rapid spread of Covid-19,” one member of the party Central Committee confirmed to this publication. The gathering was to follow the first of its kind held late last year at party Treasurer Satar Dada’s place.