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Barclays Botswana’s Van De Merwe exits in October

After many speculations about the departure of the Barclays Bank Botswana’s (BBB) Managing Director (MD) Reinnete van de Merwe, the Board Chairman Odumetse Motshidisi confirmed the news at their Annual General Meeting (AGM) on Thursday in Gaborone.  

The outgoing MD who has been with the Botswana Bank since 2014 has noted that although she is departing she remains a part of the bank and will always be available to offer support where necessary. Speaking on the departure, the Board Chairman highlighted that Reinnete leaves Barclays with a strong and capable Executive team as well as highly engaged and motivated employees.  

He noted that he had the privilege to watch the outgoing MD drive the Bank to greater heights. He cited that she led the Bank through some of the most difficult years in its history and successfully started off necessary changes that will transform the Bank into an effective and efficient organization.  Motshidisi is confident that the Bank will be able to withstand the unprecedented market challenges. Although not confirmed, sources have revealed that the MD will leave in October this year.

When reflecting on her journey, the outgoing MD noted that under her leadership they successfully executed their strategy over the last couple of years in a challenging economic environment and they remain positive on an upward trajectory. Van de Merwe highlighted that recent data from the statistics authorities shows that full year 2017 GDP growth was 2.4 percent while Inflation remained close to the lower bound of the Bank’s medium-term objective range of 3-6 percent during 2017, and was 3.2 percent in December 2017.

She observed that price developments were in the context of moderate domestic demand pressures, restrained growth in personal incomes and benign external price pressures. The outgoing MD Highlighted that even though the Pula depreciated against the South African Rand (ZAR)  in the fourth quarter of 2017 as the rand strengthened in the light of change in the ruling party’s leadership they have remained ground strong.  On the other hand, she further highlighted the Pula-US Dollar exchange rate was 9.87 in December 2017 compared to 10.31 in September 2017, reflecting an appreciation of 4.4 percent.  

Even after going thorough this trialing times, it has been established that the Bank’s Strategic Focus has resulted in  Business reporting a remarkable Profit before tax (PBT) of P558 million for the period ending 31st December 2017 representing a year- on-year growth in performance of 13 percent when  in comparison to the profit in the previous year. Net Interest income increased at 9 percent Year on Year (YoY).

The Bank has explained that despite interest rate cut of 50 basis points, driven by increased customer transaction volumes in Retail and Business Banking, Loans and advances to customers increased by 14 percent year-on-year to P10.7bn.  The bank realized a revised impairment collection process led to a 45 percent decrease on credit impairments. The AGM also provided information on the Bank’s plan to adapt part of a newly refocused Pan African business approach which is set to be a key component to growth.

The new strategy has placed the bank at a level where they want to continue being market leaders and growing Corporate and Business Banking in chosen sectors. Among other things including digital growth, the bank also wishes to deliver commitment of shared growth with an approach that speaks to mutual benefit and a positive change in communities.

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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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