Botswana Development Corporation (BDC), government investment arm this week delivered impressive sets of financial results for the year ended June 2018, mirroring a good dispatch of their ongoing five-year strategy which commenced in 2015.
The strategy was set-up by Managing Director Bashi Gaetsaloe who took over the reins in 2014 at a time when the corporation was embattled with corruption, maladministration and failing investments. At a stakeholder briefing hosted by the company in Gaborone this Thursday, Gaetsaloe observed that the 2018 trading period continued to be a challenging year economically both in domestic and global markets explaining that BDC was not spared from this toughened trading environment.
“However in the midst of these external factors, we have continued to make progress. We are now in the fourth year of our five-year strategy and we remain committed to our ambition to double the business in this strategic period,” he said. During the period under review the BDC Group raked in Profit-before-Tax of P187 million, mirroring an increase of 39 percent when gauged against P135 million registered in the prior year ended June 2017. The Group recorded a hike of 5 percent in asset base ending the trading year at 4.1 billion pula compared to 3.9 billion pula in 2017.
BDC also realised growth in interest income of 20 percent to P42million against P35 million reported during the prior year. When delivering these sets of financial figures BDC acting Chief Finance Officer Maranyane Makhondo said this was a reflection of the expected growth in debt assets, a milestone achieved in correlation with the corporation’s business strategy to rebalance the equity/debt asset profile.
“We successfully drove an increase in investment asset values at Group level with financial results for the year under review reporting an accumulative 5 percent year on year growth of Group assets to P4.1 billion,” reiterated Makhondo. Further zooming into the BDC Group’s financial highlights for the period under review indicates that income closed the year at P444 million against last year’s P403 million, reflecting a 10 percent growth year on year.
Company Profit before Tax increased by 18 percent to P244 million in 2018 from P206 million reported in 2017. Managing Director, Bashi Gaetsaloe shared that in addition to the reported financial results, his company also takes pride in the Moody’s Investors Service reaffirmation of their Baa2/Prime2 rating with a stable outlook.
“The rating agency recognised our strong liquidity and capital buffers, and assumption of a high probability of government support hence our issuer ratings entail a standalone credit profile of b1, which balances what Moody’s recognizes as a strong company solvency and liquidity position against a high concentration of strategic participation in large equity investments.”
Gaetsaloe further added that during the year 2018 BDC moved from equity investment to debt instruments with a view to align their portfolio composition to their investment mandate of just being financers and not operators “we shrunk our equity injections and hiked our debt instruments because our job is not to run businesses but just support, thus we took a deliberate stance to minimize our equity skates with a view to allow entrepreneurs , promoters and business owners to run these business so we have been moving with a small minority stake investment wave to archive this” he said.
When updating stakeholders on BDC’s investment portfolio Chief Investment Officer (CIO) Moatlhodi Lekaukau shared that the company has stretched its investment outlook with a view to expand its African footprint and diversity the corporation’s revenue streams and various market reach. He shared that the corporation has closed in on a first international deal as well as upcoming transactions both in East and West Africa.
Lekaukau revealed that in Nigeria BDC is 80 percent wrapping up a lucrative transaction that would see the corporation hold a significant stake in an undisclosed telecommunication company that operates consumer based mobile business. “We are excited about this transaction, the company is one of the top five in Nigeria, and we know the country hosts a large vibrant market so we a looking at impressive returns from this deal,” explained Lekaukau adding that an investment in the Ghana energy sector is also in the offing.
The Chief Investment Officer also shared that in Uganda, BDC will be investing in an oil refinery business, “we are cautious with this offshore investments, but they are key to our diversification strategy which seeks to expand our footprints into other vibrant and bigger markets and East Africa as well as West Africa presents that, especially in the energy and telecommunication sectors” said Lekaukau.
Commenting on these investments Managing Director Gaetsaloe added that BDC’s investments outside boarders of Botswana present a great opportunity for the company’s ambitions of being a window for Botswana’s economic aspiration. “Once we take a Botswana investment company outside our boarders we send a good image of Botswana’s economic capacity and ability, as we close these deals we create linkages with some of these companies to come and explore possible joint ventures here in Botswana with local companies as well as explore other potential business opportunities” said the BDC MD.
BDC’S FIVE- YEAR STRATEGY
Speaking to the five-year strategy Gaetsaloe explained that the strategy was bearing fruits. “We believe that our five-year strategy has delivery results, over the cause of the last four years we have returned BDC to profitability with cumulative profits of P784 million pula, paid off debt of P500 million and transferred P285 millions of listed stock to the public. We have also transferred business and assets worth over P300 million pula to local firms and Batswana, and reduced our loss making subsidiaries from nine to two. This are commendable sets of achievements,” he said.
During the last four year BDC approved P952 million to fund new projects and creating over 1200 new jobs. The government investment arm established a Reserved fund and an Investment Fund which are capitalized at over P230 million. “We have always wanted to have a buffer fund to accommodate possible shocks, that way our funders and lenders have confidence in our borrowings, to say if there was a shock to our income streams we would continue to meet our repayments obligations,” he said. Going forward, Gaetsaloe reiterated that BDC would be aligned directly to the national vision 2036 of achieving a high income economy for Botswana.
“We are a self-funding company that strives to pay-out an increasing dividend to our shareholder, being government, on year-on-year basis, we gather our funding by borrowing from local banks and capital market so that we can invest on commercial projects that drive industrialization, and create employment for Batswana,” he said.
BDC paid dividends to Botswana Government for the past three trading years since 2015 after a decade of loss making. “We raise funds, deploy fund and look after these funds to achieve shareholder value and for the year under review we have successfully driven growth across the business including significantly net worth by P700 million since 2014,” said Gaetsaloe.
The Directorate of Public Prosecutions (DPP)’s decision to reject and appeal the High Court’s verdict on a case involving High Court Judge, Dr Zein Kebonang has frustrated the Judicial Service Commission (JSC) and Judge Kebonang’s back to work discussions.
JSC and Kebonang have been in constant discussions over the latter’s return to work following a ruling by a High Court panel of judges clearing him of any wrong doing in the National Petroleum Fund criminal case filed by the DPP. However the finalization of the matter has been hanged on whether the DPP will appeal the matter or not – the prosecution body has since appealed.
Botswana Democratic Party (BDP) top brass has declined a request by Umbrella for Democratic Change (UDC) to negotiate the legal fees occasioned by 2019 general elections petition in which the latter disputed in court the outcome of the elections.
This publication is made aware that UDC Vice President Dumelang Saleshando was left with an egg on his face after the BDP big wigs, comprising of party Chairman Slumber Tsogwane and Secretary General Mpho Balopi rejected his plea.
“He was told that this is a legal matter and therefore their (UDC) lawyer should engage ours (BDP) for negotiations because it is way far from our jurisdiction,” BDP Head of Communications, Kagelelo Kentse, told this publication.
This spelt doom for the main opposition party and Saleshando who seems not to have confidence and that the UDC lawyers have the dexterity to negotiate these kind of matters. It is not clear whether Saleshando requested UDC lawyer Boingotlo Toteng to sit at the table with Bogopa Manewe, Tobedza and Co, who are representing the BDP to strike a deal as per the BDP top echelons suggested.
“From my understanding, the matter is dealt with politically as the two parties are negotiating how to resolve it, but by far nothing has come to me on the matter. So I believe they are still substantively engaging each other,” Toteng said briefly in an interview on Thursday.
UDC petitioners saddled with costs after mounting an unprecedented legal suit before the court to try and overturn BDP’s October 2019 victory. The participants in the legal matter involves 15 parliamentary candidates’ and nine councillors. The UDC petitioned the court and contested the outcome of the elections citing “irregularities in some of the constituencies”.
In a brief ruling in January 2020, Judge President Ian Kirby on behalf of a five-member panel said: “We have no jurisdiction to entertain these appeals. These appeals must be struck out each with costs including costs of counsel”. This was a second blow to the UDC in about a month after their 2019 appeals were dismissed by the High Court a day before Christmas Day.
This week BDP attorneys decided to attach UDC petitioners’ property in a bid to settle the debts. UDC President Duma Boko is among those that will see their property being attached with 14 of his party members. “We have attached some and we are on course. So far, Dr. Mpho Pheko (who contested Gaborone Central) and that of Dr, Micus Chimbombi (who contested Kgalagadi South) will have their assets being sold on the 5th of February 2021,” BDP attorney Basimane Bogopa said.
Asked whether they met with UDC lawyers to try solve the matter, Bogopa said no and added. “Remember we are trying to raise the client’s funds, so after these two others will follow. Right now we are just prioritising those from Court of Appeal, as soon as the high court is done with taxation we will attach.”
Saleshando, when contacted about the outcomes of the meeting with the BDP, told WeekendPost that: “It would not be proper and procedural for me to tell you about the meeting outcomes before I share with UDC National Executive Committee (NEC), so I will have to brief them first.”
UDC NEC will meet on the 20th of next month to deal with a number of thorny issues including settling the legal fees. Negotiations with other opposition parties- Alliance for Progressives and Botswana Patriotic Front (BPF) are also on the agenda.
Currently, UDC has raised P44 238 of the P565 000 needed to cover bills from the Court of Appeal (CoA). This is the amount in a UDC trust account which is paltry funds equating 7.8 per cent of the overall required money. In the past despite the petitioners maintaining that there was promise to assist them to settle legal fees, UDC Spokesperson, Moeti Mohwasa then said the party has never agreed in no way to help them.
“We have just been put in debt by someone,” one of the petitioners told this publication in the past. “President’s (Duma Boko) message was clear at the beginning that money has been sourced somewhere to help with the whole process but now we are here there is nothing and we are just running around trying to make ends meet and pay,” added the petitioner in an interview UDC NEC has in December last year directed all the 57 constituencies to each raise a minimum of P10, 000. The funds will be used to settle debts that are currently engulfing the petitioners with Sheriffs, who are already hovering around ready to attach their assets.
The petitioners, despite the party intervention, have every right to worry. “This is so because ‘the deadline for this initiative (P10, 000 per constituency) is the end of the first quarter of this year (2021),” a period in which the sheriffs would have long auctioned the properties.
President of the Umbrella for Democratic Change (UDC) Duma Boko’s alliance with former President Lt Gen Ian Khama continues to unsettle some quarters within the opposition collective, who believe the duo, if not managed, will once again result in an unsuccessful bid for government in 2024.
While Khama has denied that he has undeclared preference to have Boko remaining as leader of UDC, many believe that the two have a common programme, while other opposition leaders remain on the side-lines.