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NDB sinks as financial crisis hits hard

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).

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Civil Service volatility: Democracy vs Bureaucracy

19th April 2021
President Masisi

Here is how one Permanent Secretary encapsulates the clear tension between democracy and bureaucracy in Botswana: “President Mokgweetsi Masisi’s Government is behaving like a state surrounded with armed forces in order to capture it or force its surrender. The situation has turned so volatile, for tomorrow is not guaranteed for us top civil servants.

These are the painful results of a personalized civil service in our view as permanent secretaries”. Although his deduction of the situation may be summed as sour grapes because he is one of the ‘victims’ of the reshuffle, he is convinced this is a perfect description of the rationale behind frequent changes and transfers characterising the current civil service.

The result of it all, he said, is that “there is too much instability at managerial and strategic levels of the civil service leading to a noticeable directionless civil service.” He continued: “Changes and transfers are inevitable in the civil service, but to a permissible scale and frequency. Think of soccer team coach who changes and transfers his entire squad every month; you know the consequences?”

The Tsunami has hit hard at critical departments and Ministries leaving a strong wave of uncertainty, many demoralised and some jobless. In traditional approaches to public administration, democracy gives the goals; and bureaucracy delivers the technical efficiency required for implementation. But the recent moves in the civil service are indicative of conflicting imperatives – the notion of separation between politicians and administrators is becoming blurred by the day.

“Look at what happened to Prisons and BDF where second in command were overlooked for outsiders, and these are the people who had sacrificially served for donkey’s years hoping for a seat at the ladder’s end. The frequency of the changes, at times affecting the same Ministry or individual also demonstrates some level of ineptitude, clumsiness and lack of foresight from those in charge,” remarked the PS who added that their view is that the transfers are not related to anything but “settling scores, creating corruption opportunities and pushing out perceived dissident and former president, Ian Khama’s alleged loyalists and most of these transfers are said to be products of intelligence detection.”

Partly blaming Khama for the mess and his unwillingness to let go, the PS dismissed Masisi for falling to the trap and failing to outgrow the destructive tiff. “Khama is here to stay and the sooner Masisi comes to terms with the fact that he (Masisi) is the state President, the better. For a President to still be making these changes and transfers signals signs of a confused man who has not yet started rolling his roadmap, if at all it was ever there. I am saying this because any roadmap comes with key players and policies,” he concluded.

The Ministry of Health and Wellness seems to be the most hard-hit by the transfers, having experienced three Permanent Secretaries changes within a year and a half. Insiders say the changes have everything to do with the Ministry being the centre of COVID-19 tenders and economic opportunities. “The buck stops with the PS and no right-thinking PS can just allow glaring corruption under his watch as an accounting officer. Technocrats are generally law abiding, the pressure comes with politically appointed leaders racing against political terms to loot,” revealed a director in the Ministry preferring anonymity.

The latest transfer of Kabelo Ebineng she says was also motivated by his firm attitude against the President’s blue-eyed Task Team boys. “The Task Team wants to own the COVID-19 pandemic and government interventions and always cry foul when the Ministry reasserts itself as mandated by law,” said the director who added that Masisi who was always caught between the crossfire decided on sacrificing Ebineng to the joy of his team as they (Task Team) were in the habit of threatening to resign citing Ebineng as the problem.

Ebineng joins the Office of the President as a deputy Coordinator (government implementation and coordination office).The incoming PS is the soft-spoken Grace Muzila, known and described by her close associates as a conformist albeit knowledgeable.

One of the losers in the grand scheme is Thato Raphaka who many had seen as the next PSP because of his experience and calm demeanour following a declaration of interest in the Southern African Development Community (SADC) Secretary post by the current PSP, Elias Magosi.

But hardly ten months into his post, Raphaka has been transferred out to the National Strategy Office in what many see as a demotion of some sort. Other notable changes coming into OP are Pearl Ramokoka formerly with the Employment, Labour and Productivity Ministry coming in as a Permanent Secretary and Kgomotso Abi as director of Public Service Reforms.

One of the ousted senior officers in the Office of the President warned that there are no signs that the changes and transfers will stop anytime soon: “If you are observant you would have long noticed that the changes don’t only affect senior officers but government decisions as well. A decision is made today and the government backtracks on it within a week. Not only that, the President says this today, and his deputy denies it the following day in Parliament,” he warned.

Some observers have blamed the turmoil in the civil service partly to lack of accountable presidential advisers or kitchen cabinet properly schooled on matters of statecraft. They point out that politicians or those peripheral to them should refrain from hampering the technical and organizational activities of public managers – or else the party (reshuffling) won’t stop.

In the view expressed by some Permanent Secretaries, Elias Magosi, has not really been himself since joining the civil service; and has cut a picture of indifference in most critical engagements; the most notable been a permanent secretaries platform which he chairs. As things stand there is need to reconcile the imperatives of democracy and democracy in Botswana. Peace will rein only when public value should stand astride the fault that runs between politicians and public managers.

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Morupisi fights for freedom in court

19th April 2021
morupisi

Former Permanent Secretary to the President, Carter Morupisi, is fighting for survival in a matter in which the State has charged him and his wife, Pinnie Morupisi, with corruption and money laundering.

Morupisi has joined a list of prominent figures that served in the previous administration and who have been accused of corruption during their tenure in office. While others have been emerging victorious, Morupisi is yet to find that luck. The High Court recently dismissed his no case to answer application.

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Pressure mounts on Biden to suspend Covid-19 vaccine patents

19th April 2021
Joe Biden

United States President, Joe Biden, is faced with a decision to make relating to the Covid-19 vaccine intellectual property after 175 former world leaders and Nobel laurates joined the campaign urging the US to take “urgent action” to suspend intellectual property rights for Covid-19 vaccines to help boost global inoculation rates.

According to the world leaders, doing so would allow developing countries to make their own copies of the vaccines that have been developed by pharmaceutical companies without fear of being sued for intellectual property infringements.

“A WTO waiver is a vital and necessary step to bringing an end to this pandemic. It must be combined with ensuring vaccine know-how and technology is shared openly,” the signatories, comprising more than 100 Nobel prize-winners and over 70 former world leaders, wrote in a letter to US President Joe Biden, according to Financial Times.

A measure to allow countries to temporarily override patent rights for Covid related medical products was proposed at the World Trade Organization by India and South Africa in October, and has since been backed by nearly 60 countries.

Former leaders who signed the letter included Gordon Brown, former UK Prime Minister; François Hollande, former French President; Mikhail Gorbachev, former President of the USSR; and Yves Leterme, former Belgian Prime Minister.

In their official communication, South Africa and India said: “As new diagnostics, therapeutics and vaccines for Covid-19 are developed, there are significant concerns [about] how these will be made available promptly, in sufficient quantities and at affordable prices to meet global demand.”

While developed countries have been able to secure enough vaccine to inoculate their citizens, developing countries such as Botswana are struggling to source enough to swiftly vaccine their citizens, something which world leaders believe it would work against global recovery therefore proving counter-productive.

Since the availability of vaccines, Botswana has been able to secure only 60 000 doses of vaccines, 30 000 as donation as from the Indian government, while the other 30 000 was sourced through COVAX facility.  Canada, has pre-ordered vaccines in surplus and it will be able to vaccinate each of its citizens six times over. In the UK and US, it is four vaccines per person; and two each in the EU and Australia.

For vaccines produced in Europe, developing countries are forced to pay double what European countries are paying, making it more expensive for already financially struggling economies.  European countries however justify the price of vaccines and that they deserve to buy them cheap since they contributed in their development.

It is evident that vaccines cannot be made available immediately to all countries worldwide with wealthy economies being the only success story in that regard, something that has been referred to as a “catastrophic moral failure”, head of the World Health Organisation (WHO), Tedros Adhanom Ghebreyesus.

The challenge facing developing countries is not only the price, but also the capacity of vaccine manufactures to be able to do so to meet global demand within a short time. The proposal for a patent waiver by India and South Africa has been rejected by developed countries, known for hosting the world leading pharmaceutical companies such US, European Union, the United Kingdom, and Switzerland.

According to the Financial Times, US business groups including pharmaceutical industry representatives, have urged Biden to resist supporting a waiver to IP rules at the WTO, arguing that the proposal led by India and South Africa was too “vague” and “broad”.

The individuals who signed the letter, including Nobel laureates in economics as well as from across the arts and sciences, warned that inequitable vaccine access would impact the global economy and prevent it from recovering.

“The world saw unprecedented development of safe and effective vaccines, in major part thanks to US public investment,” the group wrote. “We all welcome that vaccination rollout in the US and many wealthier countries is bringing hope to their citizens.”

“Yet for the majority of the world that same hope is yet to be seen. New waves of suffering are now rising across the globe. Our global economy cannot rebuild if it remains vulnerable to this virus.”
The group warned that fully enforcing IP was “self-defeating for the US” as it hindered global vaccination efforts. “Given artificial global supply shortages, the US economy already risks losing $1.3tn in gross domestic product this year.”

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