First National Bank Botswana (FNBB), the country’s largest commercial banking services outfit by market share ended their 2018/19 financial year on a high note raking a whooping P732,536 ,000 in profit after tax.
When presenting their audited consolidated summarised financial results to an audience of shareholders, stakeholders and members of the media in Gaborone on Wednesday, the bank Chief Executive Officer (CEO), Steven Bogatsu said during the financial year focus was placed on improving credit discipline with concentrated efforts on the distressed debt portfolio.
“Additionally, priority was given to our customer-centric strategy through continued investment in infrastructure and digital customer solutions, to upgrade management of risk and liquidity, and to achieving prompt compliance with the continued introduction of new regulatory requirements,” he said. Zooming into financial highlights the bank realized 4 % growth in deposits, driven by increases in the call and current account portfolios. Statistics available as at May 2019 indicate a comparable twelve-month market growth of 12%.
Bogatsu explained that the bank’s level of participation in the market was appropriately managed by growing the transactional base for short term funding and keeping term deposits relatively flat year on year to match advances growth achieved. Gross customer advances registered a growth of 5% year-on-year. FNBB top brass say this increases was slightly behind the twelve-month market growth of 7% as at May 2019, and was largely driven by consumer term loans and asset-based finance on the back of the Government wage increase.
“We continue to manage our credit risk profile with high amortisation in higher risk business advances being largely offset by the growth in the lower risk corporate advances,” shared Bogatsu. NPLs remained relatively flat closing the year at P1.14billion, being a significant improvement on the P1.3 billion disclosed in the December half year 2018 results and indicating some success from our focus on credit discipline and accelerated collection processes. The Bank improved its efficient deployment of cash and short- term funds and increased its investment portfolio.
Giving an in-depth detailed account on the financial performance, FNBB Chief Finance Officer Luke Woodford said both profit before tax and profit after tax rose by 13% due to efficient management of all the key income and expense drivers resulting in an improved return on equity of 22.7% compared to 22.1% in 2018. Gross interest income increased by 7% against gross advances growth of 5%. Woodford explained that net interest income benefitted from a reclassification of interest in suspense between interest income and impairments in accordance with the implementation of IFRS 9.
“Interest earned on investments followed the increase in the investment portfolio, the benefits were partially offset by reduced average client rates driven by a change in the portfolio mix and compressed margins,” he said. The CFO further added that notwithstanding the rollover effect of the liquidity pressures experienced in the prior year, the interest expense increased by 7%, largely driven by a reduction in professional funding and by strong growth in the call and current deposits.
The impairment charge for the year showed a reduction of 3% against the prior year, following prudent credit extension and focus on the management of distressed advances. The stage 1 and stage 2 impairment charge of P42m reduced by 68% compared to the P110m prior year portfolio impairment charge, largely due to the prior year charge including significant downward revisions to the key provisioning assumptions. The stage 3 impairment charge increased by 17% following reductions in the expected realisable value of the collateral supporting the Home Loans, WesBank and Commercial portfolios.
Non-interest revenue grew by 7% in the year. This follows a 7% increase in the customer base and a successful roll-out of new products such as the savings pocket. The improved connectivity in the point-of-sale machines and an increase in machines in use, combined with the swipe-and-win campaign resulted in an 18% growth in card and merchant commissions. Revenue from foreign exchange grew by 15%, partly from volatility in the South African Rand.
An improvement in the cost-to-income ratio reflects continued cost management initiatives, with several expenditure items remaining flat year-on-year. Increasing resources in the collections department together with the overall annual salary review resulted in staff costs rising 7%, whilst other costs were well maintained at a 4% increase.
FNBB Boss explained that the capital management philosophy of the Bank is to maintain sound capital ratios to ensure confidence in the solvency and the quality of its capital during both calm and turbulent periods in the economy and in the financial markets. “We therefore, aim to maintain capital ratios aligned to its risk appetite and appropriate to safeguarding its operations and stakeholder interests,” he said.
For the financial year ended 30 June 2019, FNBB continued to operate above the regulatory minimum capital adequacy ratios. As at the end of the financial year, the total capital adequacy ratio was 17.42% and is above the regulatory minimum of 15.00%.
Homegrown LED light manufacturing company, The Bulb World, has kick started operations in South Africa, setting in motion the company’s ambitious continental expansion plans.
The Bulb World, which was partly funded by Citizen Entrepreneurial Development Agency (CEDA) at the tune of P4 million, to manufacture LED lighting bulbs for both commercial and residential use in 2017, announced last year that it will enter the South African market in the Special Economic Zone (SEZ) of North West province under the auspices of North West Development Corporation (NWDC).
The company has already secured a deal with South Africa authorities which entails production factory shells and tax incentives arrangements.
The company founder and Chief Executive Officer, Ketshephaone Jacob has also previously stated that the company is looking for just under P50 million to finance its expansion strategy and is reaching out to institutional investors such as Botswana Public Officers Pensioners Fund (BPOPF) and government investment arm, Botswana Development Corporation (BDC).
However, Jacob told WeekendPost that instead of sitting and waiting for expansion funding the company has started hitting the ground running.
“We have decided to get in the streets of SA, start selling lights from door to door, ” said Jacob who is in currently in Rusternburg to oversee the introduction of The Bulb World products in the market.
Jacob explained more brand activations will be undertaken in South Africa. “The plan is to do it the whole of North West and Limpopo province, through hawkers, we give the hawkers the lights to sell at a factory price and they put a mark up and make a living,” he said.
The Bulb World operates from Selibe Phikwe, it currently employees 65 young people, 80 % of which are Phikwe youth. The company plans to add 100 jobs this year alone as it forges ahead with its regional and continental expansion plans.
In July this year Bulb World products will hit South African Shelves: Pick n Pay, Checkers and Africa’s largest retailer Shoprite.
The Bulb World has been registered as a company in South Africa; the company will start producing lights from Mogwasa after striking a special economic zones deal with North West Development Corporation in North West Province South Africa.
“Over the next 10 years we are looking to create over 5,000 jobs in Africa. Through our expansion into all of Africa we will be able to create employment for various individuals in different sectors namely; manufacturing, distribution electronics and retail,” Jacob told this publication earlier this year.
Jacob said if all goes well, the plan is to have taken over Africa or rather penetrated, and have prevalent presence in the African market.
“We are gunning to have at least 30 percent market share by then. According to a 2016 Market Survey, the total valuation of sales for LED Lighting was 57BN, a portion of which we plan to have taken over by then,” he said.
While the company has set its eyes on Africa, Jacob said, the company has not fully exploited its local growth, indicating that there could be strategic factories built to supply neighbouring countries of Angola and Zimbabwe.
“There is potential for further local expansion as well to other areas of Botswana if things run smoothly as anticipated. Hopefully in the long-term if our fellow Africans and all these markets receive us well we are planning to build another factory,” he said.
“We are looking to build another factory in the Chobe/Ngamiland Area that will give priority to markets in Zimbabwe and Angola,” he said
The Maun based Okavango Research Institute (ORI) has downplayed the impacts of oil and gas exploration in part of Okavango delta arguing that given the distance proposed the likelihoods of negative impacts drilling these exploration wells on the surface water systems is likely to be negligible.
The Institution released a position paper titled ‘Proposed Petroleum (Oil and Gas) Exploration Operations in the Petroleum Exploration License (PEL) No. 73,’ with findings stating that, in the event of discovery of economically viable hydrocarbon deposits, much more careful consideration of the impacts and economic benefits of development of the resource will be needed.
For example, the fracking process for gas and oil extraction is known to require large volumes of underground water.
It further argues that increased extraction of the underground water is likely to affect the water table level and further affect the overall water availability in the river-basin.
“The effect on water availability and use may become worse if surface water is reticulated or sourced by any means from the Kavango River. Should the exploration and fracking for oil and gas expand to Block 1720, 1721 and 1821, the impact on water availability and quality will be significant, especially if the wastewater is not well managed,” said the paper.
The research unit recommends close communication between the relevant Basin State Ministries (Mineral Resources, Environment) and the Permanent Commission on the Okavango River Basin, OKACOM, and other stakeholders must be facilitated.
This will facilitate sharing of the correct information on the desired intentions of the basin states and compromises sought for the sustainability of the ecosystems in the downstream of the Cubango-Okavango river Basin, states the position paper.
ORI as a key stakeholder with scientific information says it is positioned to provide scientific advice and guidance to decision-makers on the potential impacts of both exploration and development and operation activities.
It also recommends that while the impacts might be minimal at the exploration stage, environmental impacts during the development and extraction process are significant.
Findings also state that the SADC Protocol places a mandatory duty to make a notification of planned measures undertaken in any riparian state in cases where such measures hold the potential to cause ‘significant adverse effects.’
It further states that where the planned development is trivial and not expected to cause any significant harm, the development state is not under duty to notify other riparian states.
Given that the drilling in the Kavango Region in Nambia is merely for exploratory purpose and the possibility of harm is minor, it is therefore not surprising that the Namibian government did not inform Botswana.
However, should it be found that the oil can be profitably or economically exploited, the Namibian government would be under a duty to notify both Angola and Botswana.
The institution further states that to ensure sustainable development in the Okavango Delta the following in the context of exploration for and potential development of hydrocarbon deposits within the Cubango-Okavango River Basin, it must be considered that the Okavango Delta is a World Heritage Site listed in 2014 by UNESCO and one of the binding requirements of the listing is the non-permissible commercial mining of any mineral, gas or oil within the World Heritage Site.
It states that the Okavango Delta is also a RAMSAR site in which mining is not allowed.
Should the exploration for minerals, oil and gas be allowed, there is a high chance that a mineral, oil or gas may be found given that the Delta is sitting on karoo sediments and shale rocks which in other parts of the world have been found to be sources of oil and gas deposits. Should oil or gas be discovered, there will be a strong socio-economic pressure to mine oil or gas and create jobs for the masses.
Manufactured in Turkey, Pakmaya Instant Dry Yeast can be used in the production of various fermented products, as it is suited for both traditional and industrial baking processes. All kinds of breads, buns and fermented pastry products are typical examples of applications.
Pakmaya Africa Sales Manager Cem Perdar says Pakmaya has 4 plants in across the world, further indicating that all of the plants have the highest standards of quality certificates and approvals. Regarding raw material, molasses is the main ingredient for yeast. Concerning production activities, yeast manufacturing requires high know-how and capability. Pakmaya has all those capabilities and aspects more than 45 years.
According to Perdar, Pakmaya has been existent in African markets since 30 years. From South to North, Central to East and West, a consumer can find Pakmaya in nearly every part of Africa continent.
“With its high quality, rich product selection and good service, our brand has become the favorite yeast of many Africans. On the other hand, our distributors in African countries are working very hardly and loyally in order to promote our products in their markets. After some time, we are becoming like families with our exclusive distributors in Africa and this enables both parts to work harder and keeps our product sustainable in market,” he said in an interview this week.
The yeast manufacturing giant made its way to Botswana market. The company has been smoothly working with Kamoso Distribution, a local distribution company. Perdar told BusinessPostthat two entities have been working hard to earn is market locally.
“At the moment we have a good market share with them in Botswana market. I’m sure during 2021 long, we will be increasing our sales and market position. Soon we are going to start a marketing campaign in Botswana, so that means Batswana will see and recognize Pakmaya more and more. Pakmaya wants to be the best friend of bakers in bakeries and ladies at homes in Botswana.”
As per global COVID-19 regulations to curb the spread of the COVID-19, Botswana just like other country closed borders. Providentially, the restrictions did not affect the company destructively.
Perdar says “Kamoso Africa is a very important and strong partner in Botswana territory. With Kamoso’s hard work and strict measurements, we have done a very good job. So as Pakmaya, we have not suffered any distribution problem. Our partner is doing the needful at the reaching our products to end users.”
He further said “We are doing well in Botswana market and hoping to make much more. Our aim is to enter every single corner in Botswana territory. With our new marketing campaigns, we are planning to be the most preferred yeast in Botswana market.”