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.
Botswana Democratic Party (BDP) and some senior government officials are abuzz with reports that President Mokgweetsi Masisi has requested his Vice President, Slumber Tsogwane not to contest the next general elections in 2024.
The impacts of climate change are increasing in frequency and intensity every year and this is forecast to continue for the foreseeable future. African CEOs in the Global South are finally coming to the party on how to tackle the crisis.
Following the completion of COP27 in Egypt recently, CEOs of Africa DFIs converged in Botswana for the CEO Forum of the Association of African Development Finance Institutions. One of the key themes was on green financing and building partnerships for resource mobilization in financing SDGs in Africa
A report; “Weathering the storm; African Development Banks response to Covid-19” presented shocking findings during the seminar. Among them; African DFI’s have proven to be financially resilient, and they are fast shifting to a green transition and it’s financing.
COO, CEDA, James Moribame highlighted that; “Everyone needs food, shelter and all basic needs in general, but climate change is putting the achievement of this at bay. “It is expensive for businesses to do business, for instance; it is much challenging for the agricultural sector due to climate change, and the risks have gone up. If a famer plants crops, they should be ready for any potential natural disaster which will cost them their hard work.”
According to Moribame, Start-up businesses will forever require help if there is no change.
“There is no doubt that the Russia- Ukraine war disrupted supply chains. SMMEs have felt the most impact as some start-up businesses acquire their materials internationally, therefore as inflation peaks, this means the exchange rate rises which makes commodities expensive and challenging for SMMEs to progress. Basically, the cost of doing business has gone up. Governments are no longer able to support DFI’s.”
Moribame shared remedies to the situation, noting that; “What we need is leadership that will be able to address this. CEOs should ensure companies operate within a framework of responsible lending. They also ought to scout for opportunities that would be attractive to investors, this include investors who are willing to put money into green financing. Botswana is a prime spot for green financing due to the great opportunity that lies in solar projects. ”
Technology has been hailed as the economy of the future and thus needs to be embraced to drive operational efficiency both internally and externally.
Executive Director, bank of Industry Nigeria, Simon Aranou mentioned that for investors to pump money to climate financing in Africa, African states need to be in alignment with global standards.
“Do what meets world standards if you want money from international investors. Have a strong risk management system. Also be a good borrower, if you have a loan, honour the obligation of paying it back because this will ensure countries have a clean financial record which will then pave way for easier lending of money in the future. African states cannot just be demanding for mitigation from rich countries. Financing needs infrastructure to complement it, you cannot be seating on billions of dollars without the necessary support systems to make it work for you. Domestic resource mobilisation is key. Use public money to mobilise private money.” He said.
For his part, the Minster of Minister of Entrepreneurship, Karabo Gare enunciated that, over the past three years, governments across the world have had to readjust their priorities as the world dealt with the effects and impact of the COVID 19 pandemic both to human life and economic prosperity.
“The role of DFIs, during this tough period, which is to support governments through countercyclical measures, including funding of COVID-19 related development projects, has become more important than ever before. However, with the increasingly limited resources from governments, DFIs are now expected to mobilise resources to meet the fiscal gaps and continue to meet their developmental mandates across the various affected sectors of their economies.” Said Gare.
Letlhakeng:TotalEnergies Botswana today launched a Road Safety Campaign as part of their annual Stakeholder Relationship Management (SRM), in partnership with Unitrans, MVA Fund, TotalEnergies Letlhakeng Filling Station and the Letlhakeng Sub District Road Safety Committee during an event held in Letlhakeng under the theme, #IamTrafficToo.
The Supplier Relationship Management initiative is an undertaking by TotalEnergies through which TotalEnergie annually explores and implements social responsibility activities in communities within which we operate, by engaging key stakeholders who are aligned with the organization’s objectives. Speaking during the launch event, TotalEnergies’ Operations and HSSEQ, Patrick Thedi said, “We at TotalEnergies pride ourselves in being an industrial operator with a strategy centered on respect, listening, dialogue and stakeholder involvement, and a partner in the sustainable social and economic development of its host communities and countries. We are also very fortunate to have stakeholders who are in alignment with our organizational objectives. We assess relationships with our key stakeholders to understand their concerns and expectations as well as identify priority areas for improvement to strengthen the integration of Total Energies in the community. As our organization transitions from Total to Total Energies, we are committed to exploring sustainable initiatives that will be equally indicative of our growth and this Campaign is a step in the right direction. ”
As part of this campaign roll out, stakeholders will be refurbishing and upgrading and installing road signs around schools in the area, and generally where required. One of the objectives of the Campaign is to bring awareness and training on how to manage and share the road/parking with bulk vehicles, as the number of bulk vehicles using the Letlhakeng road to bypass Trans Kalahari increases. When welcoming guests to Letlhakeng, Kgosi Balepi said he welcomed the initiative as it will reduce the number of road incidents in the area.
Also present was District Traffic Officer ASP, Reuben Moleele, who gave a statistical overview of accidents in the region, as well as the rest of the country. Moleele applauded TotalEnergies and partners on the Campaign, especially ahead of the festive season, a time he pointed out is always one with high road statistics. The campaign name #IamTrafficToo, is a reminder to all road users, including pedestrians that they too need to be vigilant and play their part in ensuring a reduction in road incidents.
The official proceedings of the day included a handover of reflectors and stop/Go signs to the Letlhakeng Cluster from TotalEnerigies, injury prevention from tips from MVA’s Onkabetse Petlwana, as well as bulk vehicle safety tips delivered from Adolf Namate of Unitrans.
TotalEnergies, which is committed to having zero carbon emissions by 2050, has committed to rolling out the Road safety Campaign to the rest of the country in the future.