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Lifeline for beleaguered Bridgetown resort

Bridgetown Resort, a lodge situated in the tourist attraction Chobe area may soon get a lifeline from unnamed potential investors. The lodge was once touted to be a dream paradise only to crumble financially just after its inception. The lodge had failed to compete with well established resorts in the north.

Bridgetown was placed under liquidation last year by Gaborone High Court after it failed to stay financially feasible despite it owing First National Bank Botswana(FNBB) a loan of close to P45 million. The resort was built from money raised by investors and an FNBB loan.  Fresh information received by this publication is to the effect that at least five potential bidders have put down an offer through a sealed ballot (private bidding) as suggested by liquidator John Little.

A closed bid system was apparently practiced to avoid collusion by interested parties according to information received by this publication. A source close to developments who would not reveal the names of potential buyers said currently bidders are being screened by Little. A property evaluation company Riberry (Pty) Limited is being engaged to value the lodge. After its inception the lodge had an open market value of P75 million.

“The liquidator will convene a second meeting with the creditors. The first meeting was done at the beginning of the year and Little will finalize the liquidation process in a few months,” said the source. According to information reaching this publication, Little has a lot to deal with in this liquidation as creditors are tumbling from everywhere confronting him with new claims.

Initially Little thought he had to deal with 100 investors who injected close to P30 million in the project and FNBB as the main creditors, but many are now approaching his office with claims and this means the liquidation will take a little longer than expected.  Attempts to solicit comment or an update on Bridgetown’s liquidation process did not materialize as Little’s phone rang unanswered.

The lodge, which came with much fanfare and hope as it was said to be well placed, being adjacent to Chobe River and a stone’s throw or one minute walk away from the Chobe National Park, is the brainchild of former minister of labour and home affairs Patrick Balopi who started the project five years ago with property and catering mogul Mansur Sidiqui.

Other investors who joined the venture must have been motivated by the former ruling Botswana Democratic Party politician partnering with owner of Mogul Catering and Oasis Motels. The company has failed to pay a loan installment of P469 575. 91 per month, according to court papers seen by this publication. 

Bridgetown defaulted on its first loan payment in April 2013. For the following months, the resort failed to pay the installment in full or did not pay the instalment at all. The whole of 2014, the resort paid nothing towards the loan installment and FNBB approached the courts.

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Botswana on high red alert as AML joins Covid-19 to plague mankind

21st September 2020

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.

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Finance Committee cautions Gov’t against imprudent raising of debt levels

21st September 2020
Finance Committe Chairman: Thapelo Letsholo

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.

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Gov’t Investment Account drying up fast!  

21st September 2020
Dr Matsheka

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”

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