Botswana Postal & Savings Group (BPSG) Board of Directors this week fired the entire board of Botswana Post, this publication has been informed.
Botswana Postal & Savings Group is a holding company established by government to incorporate Botswana Savings Bank, Botswana Couriers & Logistics and Botswana Post. According to a highly placed source at Poso House who spoke on condition of anonymity, at a closed meeting held last week the BPSG Board reached a resolution to dissolve the entire Botswana Post Board of Directors.
It is not clear what influenced the decision to dismiss the board at a time when Botswana Post is seemly progressing well with reducing losses and progressing towards sustainability and profitability. “There is no clear indication if the decision comes from the ministry or not but the holding company has all the power to appoint and dismiss the board or any employ of its three subsidiaries,” explained the source.
The dismissed Botswana Post board Chair Mr. Pedro Matau could not be reached for comment while Botswana Postal & Savings Group Board Chair Mr Puma Matlhware told WeekendPost that a communiqué would be released in due course to explain the decision. “I am not in a position to comment on the matter right now but I can confirm my board reached a resolution to relieve the board of one of our subsidiaries its duties effective immediately,” he said. Matlhware said further explanation would be made in the statement yet to be released.
Information reaching this publication also reveals that a new board is already constituted and is likely to assume its role on July 1. “The new board is being set up and we are expecting more changes, there are likely to be changes in the executive management as a new board always brings in a new crop it deems fit to drive the company mandate,” noted a source.
Following a decision in 2009 to merge Botswana Savings Bank and Botswana Post as well as Botswana Couriers a holding company was set up in 2013 to incorporate all the three companies. Botswana Postal & Savings Group Board was announced in December that year, the company’s sole mandate is to provide products and services in the areas of courier & logistics, postal, financial and Banking to Batswana through the three subsidiaries at affordable rates.
Botswana Post has in recent years transformed their operations to incorporate innovation and techno based means of delivering their products and services. In their latest financial reports it was evident that the new strategy led by Chief Executive Officer, Cornelius Ramathakwane was bearing fruits. The company has transformed their service delivery model to add structured commercial activities to using high tech and digital mechanism, providing and proximity to government services.
The company has also provided convenient ways of servicing water utilities and electricity bills settlement purchases to their customers amongst others. WeekendPost has however learned that a whole management overhaul will be instituted in no time as the company is further transformed.
“The whole mandate of this Holding company was to reduce losses of these entities, come up with better management systems and remodel it, so it might just start taking shape now, everyone is playing their cards close to the chest as no one is certain of their future here,” explained the source who further noted that government’s plans was to see postal and saving services completely independent from subvention or loans from the national treasury.
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”