Botswana ‘s oldest bank, Standard Chartered Bank last week launched watershed collaborations geared at revamping its insurance packages and shaking up the investment –linked products space. The bank which launched its new strategy beginning of the financial year roped in leading insurance companies AON Botswana, Botswana Insurance Company and Botswana Life to enhance and upgrade its Banc-assurance department.
At a glamorous event held on Thursday night in Gaborone, the Botswana Stock Exchange listed Stan Chart unveiled the short-term general insurance products for home and auto in partnership with Botswana Insurance Company and the Isago investment-linked product in partnership with Botswana Life. These products join the existing suite of long-term insurance products, Poelo Life Insurance, Bosa Hospital Plan, and Lore Funeral Cover that were launched in 2017. All the aforementioned products, long and short, are brokered by AON Botswana.
Stan Chart told attendants that the move was intended to bring convenience and innovation in its evolving service delivery. Giving opening remarks Standard Chartered Head of Client Acquisition, Peo Motshegare highlighted that the Bank’s desire was to go beyond traditional banking products.
“With our partners, Standard Chartered Bank continues to seek opportunities to be the leading one-stop shop for all the financial services needs of our clients. This means going beyond the traditional banking products of lending and deposits to helping our clients grow and protect their financial resources,” she said. Standard Chartered Bank Head of Wealth Management, Otsile Mabeo reiterated that the Bank saw value in not only providing leading solutions but also in educating the public on insurance as well.
“We have been distributing our market-leading products through our branch network for some time now, in 2017 we consolidated our products with a clear path to providing an end-to-end wealth protection suite for our clients. Beyond just being a product solution provider, we have embarked on a financial thought-leadership series where through channels such as radio we have sought to educate Batswana on the importance of having insurance solutions.”
Sharing their sentiments Botswana Insurance Company’s (BIC) CEO, Newton Jazire commended the convenience that the partnership offered. “If a Standard Chartered client wants Insurance they no longer have to run across town looking to buy insurance, everything is now housed under one roof, at favourable rates.
A ‘one stop shop’ concept!" Jazire further noted that, “BIC will continue to work hand-in-hand with Standard Chartered Bank at assessing, monitoring and evaluating products matches, areas of improvement and fast tracking services and products to adapt to consumer preferences. BIC will continuously measure the customer experience through service points to ensure that the partnership not only delivers but exceeds customer expectations,” he said.
Botswana Life’s Head of Financial Institution, Employee Benefits and Affinity Group, Joseph Kuaho indicated that corporate partnerships made for a strong business case with the ultimate benefit being to the customer; “With the current challenges facing the global economy, it is crucial for companies to explore new opportunities that afford customers financial security. This is why, as Botswana Life, we continue to heed this call and create value for our customers, point in case this ongoing strong relationship with Standard Chartered Bank Botswana offering avant-garde products.”
Standard Chartered Bank Botswana’s Managing Director, Mpho Masupe underscored that the partnership would deliver a great opportunity for innovation in services for their mutual customers , “As we innovate and develop products to meet our clients evolving needs, we look forward to availing these solutions through our digital platforms in the not so distant future,” he said.
StanChart which registered losses in the 2017 financial year is on a quest to revitalize their profitability quest. Beginning of this month the bank announced an intention to raise over 400 million Pula for recapitalization. To further return to profitability and attain sustainability the bank also launched a strategy to continue to signiï¬cantly shape the character of the economy and broader landscape of the market.
“We believe that each of these long-term trends presents opportunities that we are uniquely positioned to capture”. The strategy is anchored around observing rise of urban middle class, Digital revolution, and increasing regional connectivity as well as financial deepening and evolving regulation
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.
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.
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”