The beleaguered National Development Bank (NDB) has started the process of retrenching staff owing to financial crisis that has hit the bank, Weekend Post has established.
Information gathered by this publication indicates that P31 million has been budgeted for the retrenchment exercise, which will start next week following a meeting with the staff union. Weekend Post has been informed by insiders that between the 21st-25 of March management will issue employees with letters indicating the bank’s decision to layoff some staff. “The union had a meeting with with its members informing them about the development, the mood was sombre today [Wednesday],” said the impeccable source.
“The meeting for for the unionised employees was on Tuesday, for the non-unionised was today [Wednesday] — the letters are coming this month end.” The source further indicated that management will then proceed to inform the Commissioner of Labour as well as the minister [Finance and Economic Development] with regard to the imminent retrenchments.
In 2016, NDB requested government to inject capital amounting to about P1 billion in the next three years in order to transform the bank and prepare it for commercialisation. Last year, it was offered P400 million by government, P10o million of it being a grant while the remaining P300 million was a loan.
Chief Executive Officer of the Bank, Lorato Morapedi informed the parliamentary committee on Statutory Bodies and Enterprises in 2016 that she wants government to inject P400 million in the next financial year, followed by two governments guaranteed loans of P165 million and P250 million in subsequent years.
Morapedi said, in total, for the NDB to stabilise and be in a competitive state, it would need P1 billion. The committee learnt that NDB problems have been caused by various factors, among them its source of funding and inability to recover its loans. However, NDB has fallen short of the other P600 million initially required by the bank. Sources have informed this publication that NDB has made plans to request another P1.3 billion from government, but the new president is reluctant, and wants a new board at the NDB and CEO first before making considerations. Failure to secure more funding from government means that the bank only has P10 million to disburse as loans this financial year (2018/19).
CRITICISM OF NDB FUNDING MODEL
NDB has been warned that funding its loans from the money acquired from commercial banks is not sustainable for a development bank. The current funding arrangement was brought about by government’s decision to stop issuing bonds to NDB to raise the funds, according to Morapedi. WeekendPost understands that NDB is sourcing its funds from BIFM Capital, Barclays Bank and First National Bank Botswana (FNBB) at interest rate of 8.5 percent, and 9.5 percent for BIFM capital.
When presenting before the parliamentary committee Morapedi conceded that the arrangement is not sustainable given the fact that they are also competing with commercial banks. She informed the committee that NDB has approached government for subsidized funding. In 2016, NDB’s loan book stood at P1.3 billion, and out of that P600 million had been placed under doubtful debt, of which P300 million will be written off.
Samson Guma Moyo, the chairperson of the committee said the amount which the bank marked as provision for doubtful debt is too high, and the bank should work on reducing that. Morapedi said part of the problem was inherited, and the bank is putting forth monitoring tools to ensure that it improves the loan recovery. She further said the bank currently is doing minimal loaning, as its turn-around strategy focus on non-performing loans.
NDB has also borrowed their staff a total amount of P130 million at interest rate of 5 percent for mortgages and 8.5 percent for personal loans. This has however been questioned by committee member, Pius Mokgware who said though he believes in staff welfare, the bank was borrowing its staff at an interest lower than the interest they are charged by the commercial banks. Morapedi informed the committee that, after turning around the bank, they want to bring on board an equity partner or technical partner as part of its commercialisation strategy.
Government has adopted a commercialisation strategy similar to the one used by BTCL, in which government retains 51 percent in the entity and 49 percent is offered to the public, of which 5 percent will be offered to the NBD employees. She said even after privatisation, NDB will continue to focus on agriculture and SMME funding, and further noted that it will complement other government development institutions such as Botswana Development Corporation (BDC) which is moving away from SMME funding. Forty-six percent of NDB portfolio is Agriculture.
NDB reports to both Ministry of Finance and Development Planning and Bank of Botswana (BoB). NDB has been able to meet six months regular deadline for the ministry, while failing the three months deadline requirement by BoB of submitting audited financial statements. Another committee member, Ndaba Gaolathe had said going forward the bank should review source of funding because the current arrangement is not ideal. He said, the bank should also deal with legacy issues and clean out a lot of things.
EMPLOYEES WANT THE BOARD AND CEO FIRED
Several NDB employees who talked to this publication have stated that one way to save the financially riddled bank is to boot out the Board of Directors, Chief Executive Officer as well as senior management. One of the complaints that employees have against management is that, there are responsible for the mess at the bank, therefore, part of correcting the problem is bring new management. NDB boss is accused of refusing to listen to suggestions from employees on how best to turn around the fortunes of the bank.
“NDB is at Cul-de-sac as we speak with only P10 million to disburse for 2018/19 financial year. Only government funding will rescue the situation, but if government is to finance NDB this year, they must first get rid of those who made the loss. It will be futile to finance NDB again under the same people,” said one employee. This publication is reliably informed that the bank’s Head of Strategy has tendered her resignation, and will leave the organisation at the end of the month.
Another bank manager, responsible for Maun branch has her contract coming to an end at the end of May 2018, and employees want her also to leave the bank. Public Enterprises and Statutory Bodies committee member Ndaba Gaolathe had previously accused the NDB of lacking ambition and not having a clear vision.
He said as a development bank, they should have a clear vision of what they want to achieve and the impact they want to make in the next years. “NDB should be creative with the products it is offering and diversify the products as well,” he said. In the three years NDB has made losses; P87.8 million (2015) to P48.4 million (2016) and P168.2 million (2017).
The Directorate of Public Prosecutions (DPP)’s decision to reject and appeal the High Court’s verdict on a case involving High Court Judge, Dr Zein Kebonang has frustrated the Judicial Service Commission (JSC) and Judge Kebonang’s back to work discussions.
JSC and Kebonang have been in constant discussions over the latter’s return to work following a ruling by a High Court panel of judges clearing him of any wrong doing in the National Petroleum Fund criminal case filed by the DPP. However the finalization of the matter has been hanged on whether the DPP will appeal the matter or not – the prosecution body has since appealed.
Botswana Democratic Party (BDP) top brass has declined a request by Umbrella for Democratic Change (UDC) to negotiate the legal fees occasioned by 2019 general elections petition in which the latter disputed in court the outcome of the elections.
This publication is made aware that UDC Vice President Dumelang Saleshando was left with an egg on his face after the BDP big wigs, comprising of party Chairman Slumber Tsogwane and Secretary General Mpho Balopi rejected his plea.
“He was told that this is a legal matter and therefore their (UDC) lawyer should engage ours (BDP) for negotiations because it is way far from our jurisdiction,” BDP Head of Communications, Kagelelo Kentse, told this publication.
This spelt doom for the main opposition party and Saleshando who seems not to have confidence and that the UDC lawyers have the dexterity to negotiate these kind of matters. It is not clear whether Saleshando requested UDC lawyer Boingotlo Toteng to sit at the table with Bogopa Manewe, Tobedza and Co, who are representing the BDP to strike a deal as per the BDP top echelons suggested.
“From my understanding, the matter is dealt with politically as the two parties are negotiating how to resolve it, but by far nothing has come to me on the matter. So I believe they are still substantively engaging each other,” Toteng said briefly in an interview on Thursday.
UDC petitioners saddled with costs after mounting an unprecedented legal suit before the court to try and overturn BDP’s October 2019 victory. The participants in the legal matter involves 15 parliamentary candidates’ and nine councillors. The UDC petitioned the court and contested the outcome of the elections citing “irregularities in some of the constituencies”.
In a brief ruling in January 2020, Judge President Ian Kirby on behalf of a five-member panel said: “We have no jurisdiction to entertain these appeals. These appeals must be struck out each with costs including costs of counsel”. This was a second blow to the UDC in about a month after their 2019 appeals were dismissed by the High Court a day before Christmas Day.
This week BDP attorneys decided to attach UDC petitioners’ property in a bid to settle the debts. UDC President Duma Boko is among those that will see their property being attached with 14 of his party members. “We have attached some and we are on course. So far, Dr. Mpho Pheko (who contested Gaborone Central) and that of Dr, Micus Chimbombi (who contested Kgalagadi South) will have their assets being sold on the 5th of February 2021,” BDP attorney Basimane Bogopa said.
Asked whether they met with UDC lawyers to try solve the matter, Bogopa said no and added. “Remember we are trying to raise the client’s funds, so after these two others will follow. Right now we are just prioritising those from Court of Appeal, as soon as the high court is done with taxation we will attach.”
Saleshando, when contacted about the outcomes of the meeting with the BDP, told WeekendPost that: “It would not be proper and procedural for me to tell you about the meeting outcomes before I share with UDC National Executive Committee (NEC), so I will have to brief them first.”
UDC NEC will meet on the 20th of next month to deal with a number of thorny issues including settling the legal fees. Negotiations with other opposition parties- Alliance for Progressives and Botswana Patriotic Front (BPF) are also on the agenda.
Currently, UDC has raised P44 238 of the P565 000 needed to cover bills from the Court of Appeal (CoA). This is the amount in a UDC trust account which is paltry funds equating 7.8 per cent of the overall required money. In the past despite the petitioners maintaining that there was promise to assist them to settle legal fees, UDC Spokesperson, Moeti Mohwasa then said the party has never agreed in no way to help them.
“We have just been put in debt by someone,” one of the petitioners told this publication in the past. “President’s (Duma Boko) message was clear at the beginning that money has been sourced somewhere to help with the whole process but now we are here there is nothing and we are just running around trying to make ends meet and pay,” added the petitioner in an interview UDC NEC has in December last year directed all the 57 constituencies to each raise a minimum of P10, 000. The funds will be used to settle debts that are currently engulfing the petitioners with Sheriffs, who are already hovering around ready to attach their assets.
The petitioners, despite the party intervention, have every right to worry. “This is so because ‘the deadline for this initiative (P10, 000 per constituency) is the end of the first quarter of this year (2021),” a period in which the sheriffs would have long auctioned the properties.
President of the Umbrella for Democratic Change (UDC) Duma Boko’s alliance with former President Lt Gen Ian Khama continues to unsettle some quarters within the opposition collective, who believe the duo, if not managed, will once again result in an unsuccessful bid for government in 2024.
While Khama has denied that he has undeclared preference to have Boko remaining as leader of UDC, many believe that the two have a common programme, while other opposition leaders remain on the side-lines.